Business Plan - DDAP Licensed Facility Business Plan PDF

DDAP Licensed Facility Business Plan

Investor Proposal
Lawrence S. Rinish, Project Manager, CEO

ABSTRACT
The following business plan has been prepared to provide the potential investor(s) with

information about our company, including business structure, company goals, the current
market, key personnel, projected growth, capital requirements and start-up costs.
Revision: 1
Copy: ____
The New Program For Men
1.0 Executive Summary .................................................................................................................... 3

Chart: Highlights .......................................................................................................................... 6
1.1 Objectives.................................................................................................................................... 6
1.2 Mission .......................................................................................................................................... 6
1.3 Keys to Success ........................................................................................................................ 7
2.0 Company Summary ..................................................................................................................... 7
2.1 Company Ownership ............................................................................................................... 7
2.2 Start-up Summary ................................................................................................................... 8
Table: Start-up.............................................................................................................................. 9
Chart: Start-up ............................................................................................................................. 9
3.0 Services .......................................................................................................................................... 10
4.0 Market Analysis Summary ...................................................................................................... 10
4.1 Market Segmentation ........................................................................................................... 11
4.2 Target Market Segment Strategy .................................................................................... 11
4.3 Service Business Analysis ................................................................................................... 11
4.3.1 Competition ...................................................................................................................... 12
4.4 Health Care Reform ............................................................................................................... 14
5.0 Strategy and Implementation Summary .......................................................................... 15
5.1 Competitive Edge ................................................................................................................... 15
5.2 Marketing Strategy ................................................................................................................ 16
5.3 Sales Strategy ......................................................................................................................... 16
5.3.1 Sales Forecast ................................................................................................................. 16
Table: Sales Forecast ............................................................Error! Bookmark not defined.
Chart: Sales by Year ............................................................................................................. 18
5.3.2 Direct Cost of Sales ....................................................................................................... 18
6.0 Management Summary ............................................................................................................ 19
6.1 Personnel Plan ......................................................................................................................... 21
Table: Personnel ......................................................................................................................... 21
7.0 Financial Plan ............................................................................................................................... 22
7.1 Start-up Funding .................................................................................................................... 22
Table: Start-up Funding .......................................................................................................... 23
7.2 Important Assumptions ....................................................................................................... 24
7.3 Valuation .................................................................................................................................... 24
Page 1
7.4 Break-even Analysis .............................................................................................................. 26

Table: Break-even Analysis.................................................................................................... 26
Chart: Break-even Analysis ................................................................................................... 26
7.5 Projected Profit and Loss..................................................................................................... 27
Table: Profit and Loss ............................................................................................................... 28
Chart: Profit Yearly .................................................................................................................... 29
Chart: Gross Margin Yearly .................................................................................................... 29
7.6 Projected Cash Flow .............................................................................................................. 30
Table: Cash Flow ........................................................................................................................ 30
7.7 Projected Balance Sheet ...................................................................................................... 31
Table: Balance Sheet ................................................................................................................ 31
7.8 Business Ratios ....................................................................................................................... 32
Table: Ratios ................................................................................................................................ 32
Page 2
1.0 Executive Summary
The Company
Company ABC (Our Company, Our Agency) is a limited liability company organized under the
laws of Pennsylvania and is currently in the process of establishing a PA licensed halfway house
providing substance abuse services named The New Program on Cedar Ave in Scranton, PA.
Based on a shift in payer preferences, the demand for substance abuse services in PA and the
recent passage of healthcare reform, Corporation XYZ projects first years sales of $733,950
with a growth of approximately 12% by the second year to $820,478.
The Service Offerings
The New Program will offer halfway house substance abuse services to male’s age 18-years and
older. Substance abuse is only one of a multiple of issues facing the client. Therefore, The
New Program will provide treatment for all of the client’s presenting co-occurring issues.
Services will occur in a renovated and repurposed personal care facility that will provide
structure and accountability in a home-like environment conducive to long-term recovery
success.
Substance abuse providers are divided into levels of care by the Pennsylvania Client Placement
Criteria (PCPC). The PCPC is utilized by both providers and payers when deciding the
appropriate level of care for the client. The New Program will be a level 2B halfway
house. The large majority of clients will be referred higher levels i.e. 30-day inpatient rehabs.
The New Program must also appeal to the actual consumer of the services. Our Agency feels
the environment we offer prospective consumers is superior to other halfway house
facilities. Some offerings we provide are not offered by the majority of other halfway houses
are:
• Private Rooms
• On-site laundry rooms
• Flat Screen Televisions
• Computers with Internet Access
• Housekeeping, Maintenance and Dietary Staff
• Support in securing employment
Services are sold based on units. Units are comprised of beds in the facility assigned per
night. Current State regulations limit the initial bed count for halfway houses to 25 per
facility. Therefore, the total possible number of units that can be sold in a 365-day calendar
year is 9,125.
The Market
Of utmost importance to the success of The New Program is our ability to secure and
market our services to the payers. The primary payers of substance abuse services are
Managed Care Networks (HealthChoices), Single County Authorities (SCA), and the self-
payer. The primary revenue generated will initially stem from the Managed Care
Networks. During subsequent years The New Program will finalize agreements with more SCAs
and continue to grow the company's brand allowing for larger sales from the self-payer.
Page 3
Nearly a quarter of a million Pennsylvania residents did not receive treatment in 2005
despite admitting the need. There are 651 facilities in Pennsylvania offering 845
services and only 5% offer halfway house services. The current and future market for
substance abuse services is healthy.
Research suggests clients who complete long-term residential treatment are more likely to
remain sober longer than those who complete short-term residential treatment. Due to the
high rate of relapse combined with short-term, residential facilities costing more than double
the rates of halfway houses per unit, many payers are pressuring higher levels of care to refer
down to halfway houses once the client is medically stable. This preference of payers combined
with the fact that only 5% of substance abuse services are halfway house services and nearly
250 million residents of PA went without treatment, there is an obvious need for more halfway
house services in the State.
HealthCare Reform
Corporation XYZ maintains a willingness to take advantage of available technologies, software,

resources and treatment models to give us our competitive advantage. However, the
strongest competitive advantage we possess is our ability to build, grow and adapt to the
current passage of health care reform.
The recent passage of HealthCare Reform will cause a tremendous upsurge in the number
of insured individuals able to receive substance abuse services. By 2019 more than 15 million
people will be eligible to enroll in Medicaid coverage while private insurance coverage will
expand to include 16 million people. And unlike many insurance policies of the past, healthcare
reform specifies that private insurers must cover substance abuse treatment at the
same level as other health conditions. The demand for services will continue to grow in the
foreseeable future.
HealthCare reform also mandates an accelerated development of strategies to ensure an

improved delivery of services and their outcomes in a measurable fashion. Clients
must also be able to access other necessary services such as mental health care while in
treatment. Health Information Technology initiatives have also been mandated by the
new laws. Providers will be required to implement electronic health records. These
mandates are all areas Corporation XYZ planned for prior to the passage of HealthCare Reform.
Financial Considerations
Under this plan, our company is expected to perform well and produce profitable results by the
second year of operations.
Our company projects unit sales to reach 7,725 in our first year, 8,578 in our second and 8,850
in our third. The total revenue generated from unit sales would be $733,950, $820,478 and
$847,790 respectively.
Upon becoming profitable in the second year of operations, our company is expected to perform
and produce the following averaged ratios:
• 63.45% Gross Margin
• 12.50% Net Profit Margin
• 23% Pre-tax return on assets
• 31% Return on Equity
Page 4
The facility that houses The New Program served as a personal care home previously. As a
result, it was necessary to renovate and repurpose the facility in order to comply with State
Licensing standards. The total start-up costs for The New Program is $246,836.
Out of the necessary $246,836 for start-up, we have taken on $110,000 in the following debt:
1. Debt Financing - $75,000
2. Current Borrowing - $35,000
The remaining capital required for start-up is $136,836. Corporation XYZ is seeking to raise
$160,000 dollars from equity investments.
Investment Proposal
Of the necessary $246,836 required for start-up, Corporation XYZ is seeking a combined total
of $160,000 from two equity investors. The following is New Hope Rehabilitation Affiliates'
proposal for potential investors:
Corporation XYZ is seeking an $80,000 capital investment. In exchange for an $80,000 dollar
investment, the investor would gain 20% ownership in the operating company of The New
Program. The investor would receive a guaranteed payback of their original investment within
5 years. The investment would also provide the investor with preferred distribution
status. 50% of all distributions made would be preferred distributions. Preferred distributions
would be made to the investor until the original investment was paid back. After the payback is
realized the investor would then begin receiving 20% share of normal distributions.
As an equity investor, the person or entity making the investment would also receive an
advisory fee on a monthly basis. The advisory fee would be equal to 8% of the remaining
original investment calculated monthly. As an example, the investor would receive 1/12th of
8% of the $80,000, which is a payment of $533.33 monthly. The investor would continue
receiving this amount as an advisory fee until a distribution is made. If the first distribution is
made to the investor in the amount of $20,000 then the monthly advisor fee would be equal to
$400 dollars ((80,000 - 20,000)*.08)/12 = 400.
Page 5
Chart: Highlights
1.1 Objectives
To continuously develop, strengthen and improve services offered by the Agency.

1. Strengthen the current payer mix by developing and maintaining strategic alliances with the
four major behavioral health managed care companies and Single County Authorities (SCA).
2. Continue identifying and developing strategic alliances with potential referring addiction
agencies within Pennsylvania.
3. Identify and foster strategic alliances and networks with community medical group
practices.
4. Continue building operations towards compliance with healthcare reform
5. Integrate electronic client record & billing system one month before starting date
6. Finalize integration and staff training of electronic client records
7. Identify potential future growth opportunities for providing services to women, adolescents
and gambling addictions.
8. Continuously assess client, referral and payer satisfaction from perspectives vital to each
entity.
1.2 Mission
New Hope Rehabilitation Affiliates' focus is to create, promote and maintain a positive customer
relationship with our clients, payers, staff, contracted service providers and our
community. Therefore, it is our mission to promote the development of individuals suffering
from addiction and other co-occurring issues into valuable community-minded assets by
providing a high level of professional treatment.
Page 6
1.3 Keys to Success
The primary Keys to Success for the facility are:

• Secure sufficient level of working capital by start of project.
• Be profitable on a forward based by year two of operations.
• Maintain strong professional relationships with current referring agencies while building
outreach programs in order to continue building larger network.
• Managed Care friendliness through cooperation, accessibility and clinical focus.
• Continue seeking subsequent Single County Authority relationships and contract
agreements will all counties in Pennsylvania.
• Functioning as an organization that is fluid, responsive and willing to adapt in order to meet
shifts in industry due to healthcare reform.
• Accessibility and responsiveness to the needs of the customers.
2.0 Company Summary
Company ABC is a limited liability company providing halfway house services for the addicted
male at 929 Cedar Ave, Scranton, Pennsylvania 18505. The Principal members have over two
decades of owning or operating nursing and personal care homes across the State of
Pennsylvania.
The Executives of our company anticipates the facility will have a positive impact on the local
community and economy. The building that The New Program is located in, Assisted Living
Manor, was modified from a school into a personal care home and is currently in the process of
building renovations again so as to accommodate halfway house services and office space. An
application for licensure was recently submitted to the State and approval is expected shortly.
2.1 Company Ownership
• Principal Member - Mr. P. Member
Mr. Member is the principal member of Company ABC and also serves as the President. The
President of Company ABC serves as the Governing Body for the company. Mr. Member has a
degree in accounting and prior to becoming an entrepreneur worked as a CPA. Mr. Member has
nearly two decades of owning and/or operating personal care and nursing homes. Currently, Mr.
Member owns, partners or is the Chief Executive of Mr. Member is particularly skilled in acquiring
distressed facilities and returning them to profitability.
Page 7
2.2 Start-up Summary
The Start-up Table below reflects the total costs necessary to begin operations.
Renovation of the building is necessary to upgrade the facility with renovations costing
$40,787. Renovation consists of:
• Removal of old carpet cove base, refuge, old mattresses, etc.
• Cleaning & Sanitation of entire floor
• New carpet and cove base installation of entire floor
• Plumbing & Restroom Repairs
• Medication Room Creation
• Minor wood, door and room repairs
The total costs of consultant fees and subsequent salaries are approximately $63,114. This
includes monies utilized for developing policies & procedures, employee manuals and
overseeing the application process for licensure, network funder and SCAs contracts.
The remaining start-up expenses are for general office supplies, recurring utilities (phone,
internet, water, electricity and sewer), and legal fees for business organization, marketing
development materials and travel expenses.
The total cost of start-up assets is $130,296. Long-term assets required by the facility include
computer equipment for staff, networking equipment, telephone system, electronic client record
software and 2 vehicles for client transportation.
The intangible assets include a company logo and its website. $70,000 dollars in available
capital is necessary upon opening until receivables are realized.
The total start up requirements total $246,836. In order to fund the start-up costs, Corporation
XYZ has projected utilizing the following types of assets.
Debt Financing
The New Program has utilized $75,000 from a loan through Wakefield Capital. The term of the
loan is 6 years and has an 8% interest rate.
Equity Financing
Currently, Company ABC is seeking 2 equity investments for a total of $160,000. Each
investment of $80,000 would secure a 20% ownership of the operating company. 50% of all
distributions would be paid to the investors towards a pay down of the original investment
amount. Each investment would come with a guaranteed payback of the original investment
within 5 years. The person or entity investing the $80,000 would also be paid as an advisor
either monthly, quarterly or annually. The advisor fee would be 8% of the total remaining
investment calculated monthly.
Current Borrowing
Company ABC has borrowed a total of $35,000 dollars in start-up funds.
Owner's Costs
Any costs not covered via debt and the owner will make equity financing.
Page 8
Table: Start-up
Start-Up
Requirements
Start-up Expenses
Building Renevations $40,787
Office Supplies $1,400
Utilities, Phone, Internet $3,789
Salaries $63,114
Legal $250
Marketing Development $4,000
Travel $3,200
Total Start-up Expenses $116,540
Start-up Assets
Cash Required $70,000
Start-up Inventory $0
Other Current Assets $2,500
Long-term Assets $57,796
Total Assets $130,296
Total Requirements $246,836
Chart: Start-up
Page 9
3.0 Services
The New Program will provide a halfway house substance abuse services to males age 18 and
over who suffer from substance abuse issues and reside in Pennsylvania. Additional co-
occurring issues will be addressed professionally either in-house or through contracted care
services.
In order to treat the multitude of issues facing today's addict, The New Program utilizes a multi-
model approach. The types of models that our staff can utilize when providing services are
Cognitive-Behavioral Therapy, Development Model of Recovery (DMR), Relapse Prevention
Model (RP), Stages of Change and Motivational Interviewing.
The treatment components are made up of:

• Individual therapy
• Small group therapy
• Psychoeducational lectures
• Family counseling
• Contracted mental health and psychopharmacology services
• Life skills education
• Vocational/employment training
• Peer support groups
• 12-Step Education
• HIV/AIDS Education
• Relapse Prevention Education
• Individual Aftercare Planning
4.0 Market Analysis Summary
The demand for health care providers who provide individualized services has declined. This
has created a clinical market that requires the provider to demonstrate the ability to serve
multiple client behavioral issues i.e. substance abuse AND mental health. Demonstrating the
ability to provide these multitude of services has not happened at a rate fast enough to keep up
with the need. According to 2004-2005 NSDUH Data, nearly a quarter of a million residents of
Pennsylvania needed but did not receive treatment (SAMHSA, 2005).
Although the substance abuser is the end consumer, the payers of services are: Managed Care
Networks, Single County Authorities and some Self-Payers. Of the three, managed care
companies and SCAs clearly drive the large percentage of payers within the state.
HealthChoices is the managed care program for Medicaid eligible persons in

Pennsylvania. There are 4 major companies managing the Managed Care accounts within
Pennsylvania:
1. Community Care Behavioral Health (CCBH)
2. Value Behavioral Health of PA (VBH)
3. Magellan Behavioral Health of PA
4. Community Behavioral Health Network of PA (CBHNP)
Due to the high rate of relapse by the substance abuse population as well as the high cost of
medically monitored residential treatment and the recent research indicating long-term
treatment provides the best chance of client success, Managed Care Networks have
demonstrated preference towards inexpensive long-term care. The average rate of a traditional
30-day medically monitored treatment stay is almost identical to a 90-day halfway house
stay. As of 2010, only 5% of the 651 substance abuse facilities in Pennsylvania were halfway
houses. There is strong demand for more halfway house services.
Page 10
4.1 Market Segmentation
Company ABC believes there are three primary entities in which to market The New Program,
each with their own specific needs. These include:
1. Referral Source
Physicians - Professionalism
Hospitals - Consultations
Treatment Facilities/Agencies - Accessibility/Professional Trust
2. Individuals and Families

Individuals - Accessibility
Couples - Respect/Accessibility
Families - Compassion
Groups - Empathy
3. Managed Care Company and

Other Payers
MCOs - Clear Communication
Self-Pay - Best Services Offered for Modest
Cost
Single County Authorities - Clear Communication
4.2 Target Market Segment Strategy
For The New Program to become the primary halfway resource located in Northeastern
Pennsylvania, it will be important to market our services aggressively. As noted, managed care
companies will make up the largest percentage of payers with the Single County Authorities
second, followed by self-payers. Focusing on and identifying the needs of both the payers as
well as the referring treatment facilities are important strategies to consider when we begin our
marketing push.
When marketing to payers it is important to demonstrate our professional ability to provide a

multitude of results-oriented services at a modest cost. Marketing to SCAs will require
consistent contact and ensuring we meet our contractual obligations/requirements.
4.3 Service Business Analysis
The substance abuse industry in Pennsylvania is comprised of 4 levels of care and 9 types of
services. The levels of care and their types of services are:
Level 1
A Outpatient
B Intensive Outpatient
Level 2
A Partial Hospitalization
B Halfway House
Level 3
A Medically Monitored Detox
B Medically Monitored Short-Term Residential
C Medically Monitored Long-Term Residential
Page 11
Level 4
A Medically Managed Inpatient Detox
B Medically Managed Inpatient Residential
The New Program is considered a Level 2B Halfway House. In order to determine what level of
care the client requires a comprehensive clinical assessment conducted by a qualified
professional prior to applying the PCPC for level of care determination. The PCPC is utilized by
payers (Managed Care & SCAs) and providers to determine the level of care required for the
client.
The Division of Drug and Alcohol has set standards that insist upon the client receiving a
"Continuum of Care". The client begins at one level of care (which normally is the most
restrictive level in terms of inpatient and outpatient) and is referred to a lower level of care as
he/she is determined to have no longer met the criteria for their current level. Therefore, it is
vital to market and network with those in the levels of 3 and 4 who accept managed care and
SCA funding.
4.3.1 Competition
As of 2010, there are approximately 651 substance abuse services being offered in
Pennsylvania. However, substance abuse organizations sometimes offer multiple
services. According to the National Survey of Substance Abuse Treatment Services (N-SSATS),
there were 533 substance abuse facilities in the state of PA.
Of all the substance abuse facilities established in Pennsylvania, approximately 6.2% of

them are Halfway Houses (33 total facilities total). In order to be admitted to a Halfway
House, most clients need to demonstrate completion of a higher level of care.
Halfway Houses making up only 6.2% of substance abuse facilities in Pennsylvania are
significant due to the fact that the largest majority of clients are referred from other levels of
substance abuse care.
Based on these numbers, there are two predominant competitors to The New Program and an
alternative service competitor:
1. Halfway Houses
2. Other Long Term In-Patient, Hospital Rehabilitation Facilities
3. 3/4 House, Transitional Living, Recovery House (private, for-profit, non-therapeutic
environment)
The two regional halfway house competitors consist of Clem-Mar House, Inc. and Treatment
Trends, Inc.
1. Clem-Mar House, Inc. (Edwardsville, PA)
Financial Statistics: 7/01/08 and ending 6/30/09

Total Revenue - $1,487,271
Total Expenses - $1,630,335
Total Units Sold (Male) - 8,592
Total Units Sold (Female) - 8,115
Liquid Assets Reported - $157,849
End of Year Liabilities - $63,741
Page 12
Clem-Mar House for Men, located in Edwardsville, Pennsylvania with a female facility in Dallas,
Pennsylvania. Established in 1994, this facility was one of the first halfway house service
providers in the Northeast Region of PA. This facility is a non-profit organization, and as a
result, receives a large amount of charity and donations to help meet their raw food needs,
client cosmetic needs and furniture needs. As a result of being established for nearly 18 years,
Clem-Mar House enjoys consistent referrals from facilities and often has a large waiting list of
clients waiting for admission. Clem-Mar House established a female halfway house in
2004. Corporation XYZ sister company owns the lease where the female house is established.
a. Strengths:
• First in local market
• Length of Time Established
• Non-profit benefits
• Network of consistent referrals
b. Weaknesses:
• Lack of strong supervisory structure
• Limited involvement by Project Director
• High Staff Turnover
• Industry Relationships (considered one-sided, ignorant and unwilling by other area
professionals resulting in negative perception within substance abuse community)
• Aging facilities and unwillingness to make necessary capital expenditures
• No marketing/advertising plan
c. Potential Impact of Strengths

• Large pool of resources to draw from
• Ability to secure additional forms of capital
• Politically well connected
d. Strategies to Thwart Competition

• Develop a strong marketing plan that includes new media
• Demonstrate the willingness to work cohesively with other organizations
• Develop reputation for providing quality services
• Offer better facilities and ancillary offerings within the facility i.e. Single Client Rooms
• Respond to needs of referral sources
• Respond and demonstrate respect to consumer
• Develop niche markets that include treating co-occurring issues in a professional manner
2. Treatment Trends, Inc. (Allentown, PA)

A treatment trend is a private, non-profit organization that provides multiple levels of care at
their facilities. The facilities are located in Allentown Pennsylvania, in the Lehigh
Valley. Services are delivered through the four community-based divisions of Treatment
Trends, Inc. They include a residential therapeutic community, Keenan House; and intensive
outpatient and out-patient program, Confront; a transitional living recovery house, Richard S.
Csandl Recovery House; a halfway house, Halfway Home of the Lehigh Valley; and
assessment/case managed unit, Treatment Continuum Alternative Project (TCAP) and a
veterans program. Treatment Trends is unique in that is has established different levels of
care, therefore, allowing their facilities to also serve as the referral source to that next level of
care.
Page 13
** Treatment Trends attempted to acquire Clem-Mar House, Inc. in 2004 for approximately 1
million dollars. The Board of Clem-Mar House, Inc. voted against the sale of Clem-Mar House,
Inc.
Financial Statistics: 7/01/08 and ending 6/30/09 (for halfway house services)
Total Revenue - $1,076,360Total Expenses - $1,014,928
Total End of Year Assets (for all operations) - $2.2m ($102, 836 in liquid assets)
Total End of Year Liabilities - 386,406 (accts payable)
a. Strengths:
• Well Established Internal Referral Network
• Aggressive Growth Plans
• Professional Affiliations
• Contracts with Dept. of Corrections & PA Start Parole Board
• Non-profit benefits
• Strong Staff of Executives & Board of Directors
b. Weaknesses:
• Size (larger facilities begin to focus on numbers instead of client care)
• Aggressive Growth Plans (many smaller facilities feel alienated and unable to compete)
• Internal Referral Network (Inability to recognize external shifts in referral patterns)
• Community Corrections (Seen as institution housing criminals instead of treatment facility)
• Old Marketing Strategies (Despite size of organization and services offered, not considered
major player in industry)
c. Potential Impact of Strengths

• Secure future contracts from other providers
• Ability to fund additional growth and capital expenditure needs
• Politically well connected
• Professionally well connected
d. Strategies to Thwart Competition

• Develop a strong marketing plan that includes new media
• Create intimate therapist/client relationships instead of clients being numbers
• Develop reputation for providing quality services
• Provide a 'non-institutionalized' feel to facility
• Respond to needs of referral sources
• Respond and demonstrate respect to consumer
• Network with entities/organizations alienated by internal referrals
4.4 Health Care Reform
In order to make strong projections regarding the substance abuse treatment industry it is
important to understand what role the recent Healthcare Reform laws will have.
The Patient Protection and Affordable Care Act increases access to mental health and addiction
services and promises better access to treatment. Due to the expansion of public and private
coverage, more people will have access to treatment. Medicaid coverage will expand to
persons at 133% of the Federal Poverty Level i.e. 15 million more people will be eligible to
enroll in Medicaid by 2019.
Page 14
Private insurance coverage will expand to include an additional 16 million people by 2019 and
the parity law embedded in healthcare reform specifies that private insurers must cover mental
health and substance abuse treatment at the same level as other health conditions.
Despite the shift in technology and how it used to the co-occurring issues that addicts come
into treatment presenting, there are still a number of facilities that have refused or have been
unable to shift with the substance abuse service market. With the passage of health care
reform many of these facilities will be forced to make these transitions in an uncomfortable and
unnatural manner. This is where Company ABC will have a strong competitive advantage.
It is anticipated that healthcare reform-driven service delivery redesign and payment reform
will change how health, mental health and substance abuse services are integrated, funded and
managed. There will be a need to provide measurable, high-performing recovery and wellness
services and supports. At the same time there will be a need to meet the demand for the
integration of behavioral health clinicians and primary care providers in treatment
organizations.
Infrastructures of old will be challenged with the accelerated development of a national quality
improvement strategy that will be utilized to improve the delivery of services, their outcomes
and the costs associated with them. Health Information Technology initiatives have also been
mandated by the passage of the health care reform laws and service providers will be required
to implement electronic health records and connect these systems to health information
exchanges.
Company ABC recognizes an incredibly strong opportunity to become industry leaders of in the
new age of health care reform. By building our facility and service offerings around the
mandated items of health care reform, The New Program will serve as a model of substance
abuse provider services.
5.0 Strategy and Implementation Summary
The New Program will focus its market activities in the Northeast Region of Pennsylvania and
then continue expanding our radius to the entire state.
The target customers are the male consumers of halfway house and co-occurring services. The
other vital targets are the payers as they are integral part of our strategy as they maintain the
funds necessary for services.
5.1 Competitive Edge
The keys to our competitive edge:

• Start-up operations built around mandates stemming from passage of health care reform
• Executive with experience providing halfway house services and in web services industry.
• Executive with start-up experience
• Professional support from higher levels of care substance abuse providers
• Experience in using new age marketing to generate brand recognition and sales
• Recruiting/Securing treatment staff with many years of experience and resources
• Principal Member with two decades of experience owning/operating social service facilities
• Ability to adjust and adapt to current changes in health care climate.
• Superior professional and facility offerings
Page 15
5.2 Marketing Strategy
Due to the lack of competing facilities utilizing new media strategies, our company feels a
strong online marketing plan that consists of web, social media, video and paid search will
position well ahead of competing service providers.
While utilizing marketing strategies that many of our competitors do not, it is still important
that we continue marketing our abilities to service co-occurring issues of the clients as well as
maintaining a superior facility via direct contact, mail brochures and by attending industry
specific seminars.
5.3 Sales Strategy
By providing an environment that can address multiple client issues in a high-quality and
professional manner, referring facilities will be able to refer to the client to one service provider
as opposed to a multiple lower level of care service providers.
The Executive and Administrative members of the company will fill units based maximizing
revenue. The payer with a payment rate closest to The New Program 's set rate will be given
preference unless extenuating circumstances or a potential strategic opportunity exists
otherwise.
5.3.1 Sales Forecast
1 bed per client overnight is considered one (1) unit. The New Program houses 25 beds,
thereby allowing for 25 clients to be serviced at any one time. Using a standard 365-day year,
the maximum number of units the facility can sell is 9,125 units per year. Using January 2011
as our recognized first month of business operations, we believe that 7,725 units will be sold
within the first year. In year 2 we forecast, conservatively, 8,578 units being sold followed by
8,850 units being sold in year three. Our sales projections are based on our competitor’s total
number of yearly units. We feel that by providing client pick-up transportation it will provide us
with the opportunity to ensure limited unused units per year.
The cost per unit varies depending upon the payer. Each managed care company sets its own
rate of what they are willing to pay for specific services. Currently, managed care payers have
set fees between $93 dollars per unit up to $100 for halfway house units. When setting our
rates, Corporation XYZ will complete the SCA Regional Application and demonstrate the need
for a $99 dollar unit rate. Clem-Mar House, Inc., which is located in the same geographical
area and has its rates set by the same agencies as The New Program, has a current rate of $96
dollars per unit. Due to The New Program 's additional offering of services and
accommodations combined with the fact that we do not have the ability to solicit charity we feel
confident in our ability to secure a $99 per unit rate.
In our sales forecasts we utilized a conservative rate of $95 for Managed Care Network payers,
$96 for SCAs and $99 for self-pay clients.
As noted in the following chart and table, Corporation XYZ forecasts our ability to reach full
capacity of clients within the first quarter or early second. Due to the Executive Director's
strong network relationships combined with a staff build-up that will consist of therapists and
supervisors who have many years of experience working closely with referring agencies, our
ability to reach full capacity in a timely manner is reasonable. The New Program has also been
Page 16
approached by a state provider of Community Corrections services who is seeking a local facility
to refer their clients to after completion. The Community Corrections Service provider has
facilities across the state and would be a strong source of referrals if an agreement can be
reached.
In the early phase of operation, we expect the majority of clients to have Managed Care
Networks as their funding source. Once we continue establishing SCA contracts from the
subsequent counties, we expect our payer mix to become more diversified. We expect that
continued satisfaction and a strong marketing campaign will bring larger numbers of self-pay
units being sold by year three.
Table: Sales Projections
Sales Projections 2011 2012 2013

Unit Sales
Managed Care Days 7,650 4,810 4,810
County Funded 75 3,168 3,040
Other/Private Pay 0 600 1,000
Total Unit Sales 7,725 8,578 8,850
Unit Prices 2011 2012 2013

Managed Care Days $95.00 $95.00 $95.00
County Funded $96.00 $96.00 $96.00
Other/Private Pay $0.00 $99.00 $99.00
Sales
Managed Care Days $726,750 $456,950 $456,950
County Funded $7,200 $304,128 $291,840
Other/Private Pay $0 $59,400 $99,000
Total Sales $733,950 $820,478 $847,790
Direct Unit Costs 2011 2012 2013

Managed Care Days $34.70 $34.91 $35.01
County Funded $34.70 $34.91 $35.01
Other/Private Pay $0.00 $34.91 $35.01
Direct Cost of Sales

Managed Care Days $265,440 $167,917 $168,398
County Funded $2,602 $110,595 $106,430
Other/Private Pay $0 $20,946 $35,010
Subtotal Direct Cost of Sales $268,042 $299,458 $309,839
Page 17
5.3.2 Direct Cost of Sales
When determining Direct Costs of Sales, Corporation XYZ utilized the hotel model due to both
industries selling units per night by bed. As such, the following are the variable costs utilized in
determining the Direct Costs of Sales in the Sales Forecast:
• Contracted Care Services

• Clinical Base Salaries
• Staff Training
• Building & Grounds Maintenance Base Salaries
• Maintenance Supplies
• Auto & Travel Expenses
• Trash Removal
• Electricity
• Gas
• Water
• Sewer
• Dietary Base Salaries
• Raw Food
• Housekeeping Base Salaries
• Janitorial Chemicals
• Laundry Chemicals
• Linens
• General Supplies Associated w/ Above
Page 18
6.0 Management Summary
Our company philosophy is based on the belief that a mutual respect for all contributions made by
our partners, investors, consultants and employees without regard to the position held. Corporation
XYZ recognizes the importance of allowing for an environment and culture that fosters an open line
of communication and the freedom to share and express ideas. We believe that well-taken care of
and respected employees will provide the highest level of professional services to the consumer.
6.1 Management Team

Lawrence S. Rinish, Executive Director
Mr. Rinish has an undergraduate degree in Sociology, a master's degree in business administration
with a specialization in finance and studied at Investment Banker's Institute in Manhattan, NY. He
is skilled in financial analysis, budget oversight, business management and problem solving. He
previously worked as an educator, therapist, served in the Armed Forces as an administrative
specialist and, prior to his Executive Director role, held the Clinical Director position with Clem-Mar
Women's House. Mr. Rinish also founded a web services firm and his skills encompass online brand
planning & development and marketing solutions for small to mid-size businesses.
Mr. Rinish has had a successful career in both the behavioral health and web industry and is
experienced in a wide range of executive level positions. He has served in a number of capacities
including chief executive, clinical director, project manager, online entrepreneur and financial
analyst.
Responsibilities: Senior Management, Develop and implement strategic business plan(s), develop
clinical program, financial oversight, day-to-day operations, negotiate company
contracts/agreements, coordination of resources, public relations, customer service, marketing
director, seek strategic partnerships, seek potential acquisitions and/or expansion opportunities.
Edward Walsh, Clinical Director
Mr. Walsh has nearly a decade and a half of experience working in the substance abuse field for
one of the nation's most well respected companies, Clear Brook, Inc. He has worked as both a
therapist and spent the better half of the last decade as the Clinical Supervisor for Clear Brook
Manor. The Pennsylvania Certification Board has awarded Mr. Walsh the following certifications:
Certified Addictions Counselor (CAC), Certified Clinical Supervisor (CCS), Certified Criminal Justice
Addictions Professional (CCJP) and Certified Co-Occurring Disorders Professional (CCDP).
Mr. Walsh is not only highly skilled in vital areas of client treatment but maintains a large level of
potential referral networks in the State of Pennsylvania. He is also the current Owner and Director
of Gratitude House which is a ¾ House in Scranton, PA thus providing The New Program with
another potential resource in which to utilize.
Responsibilities: Day-to-day clinical operations, supervise & train therapeutic teams, oversees
established budget for clinical operations, ensures facility remains in BDAP and State Licensure
compliancy, reviews and makes recommendations for modifications to policy and procedures,
develops staff training schedule, maintains and builds referral network, liaison to area/state
resources and service provider.
6.1 Organizational Structure
Page 19
Page 20
6.3 Personnel Plan
The Personnel Table is comprised of the two Executive/Administrative members of the company
less 13% for payroll taxes, which are found under payroll taxes in the profit & loss
statement. The remaining staff member salaries are considered variable expenses and
calculated into the Direct Costs of Sales.
Table: Personnel
Page 21
7.0 Financial Plan
Company ABC has raised $110,000, $35,000 of its own capital and $75,000, in start up
costs. Management projects that it will need to obtain an additional $80,000 in investment
capital to fund additional physical plant improvements and furnishings, labor costs and other
expenditures until the facility is able to support itself from operations.
When examining our company's financial plan we examined four important factors:
1. Securing Regional SCA, approval as a network provider for home county Managed Care
Company (CCBH) and subsequent approval with the remaining Managed Care Networks
across the State.
2. Our strong network relationships with referral sources and our ability to continue
establishing a larger referral base needed to maintain client numbers.
3. Aggressive time management as to control labor costs and other expenditures while
growing the number of clients serviced to a maximum of 25.
4. Ability to deliver billing claims within 1 day from day service rendered thus realizing
receivables within a 30-day period.
5. Improving cash flow
6. Significant growth in the first year and modest growth the second and third year.
7.1 Start-up Funding
Company ABC has summarized our start-up funds in the
Page 22
Table: Start-up Funding
Start-Up Funding
Start-up Expenses to Fund $116,540
Start-up Assets to Fund $130,296
Total Funding Required $246,836
Assets
Non-cash Assets from Start-up $60,296
Cash Requirements from Start-up $70,000
Additional Cash Raised $0
Cash Balance on Starting Date $70,000
Total Assets $130,296
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $75,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $35,000
Total Liabilities $110,000
Capital
Additional Investment Requirement $136,836
Loss at Start-up (Start-up Expenses) ($116,540)

Total Capital $20,296
Total Capital and Liabilities $130,296
Total Funding $246,836
Page 23
7.2 Important Assumptions
Company ABC has made the following assumptions regarding our financial plan and projections:
1. Our long-term commercial loan is amortized at 8% interest over 6 years.
2. Pricing has been established using a conservative $95 rate despite applying for rate of $99.
3. Employee wages and benefits have been projected using full time and eight hour shifts with
benefits. Payroll will be outsourced through a payroll company.
4. The economy continues at its present rate, without major recession.
5. The use of electronic billing software with EDI billing integration will allow for the billing and
realizing of receivables in an expedited time.
6. The large need and demand for long-term, residential addictions treatment continues.
7. Managed Care and SCA contracts will be approved without difficulty.
8. Our staffing patterns will be able to manage the projected growth.
9. The average days of receivables will be 30 days or less.
10. Managed care continues to manage the services but does not attempt to cap them at less
than 90 days per client.
11. Continued growth of current referral network.
7.3 Valuation
In the following Valuation & Investment Table, one should note that we utilized the Sales
Multiplier Valuation across the first three years. Using a conservative multiplier of 1.5 the
company's valuation for the first year in millions is $1.1 with the company showing a valuation
of $1.2 in years 2 and 3.
Corporation XYZ feels this to be a strong indicator of our value when researching past
acquisition attempts of another like-company providing the same services in the same
geographical landscape. In 2004, Treatment Trends, Inc. offered to acquire Clem-Mar House,
Inc. for approximately $1,000,000. This offer was rejected by the Board of Directors based on
the belief that the offer undervalued the company's worth.
Using the based investment proposal with a 10% Discount Rate, we also calculated Final
Valuation, Final Payout Amounts, Net Present Values and Internal Rate of Returns using both
Sales and Earnings multipliers for different variables. These calculations are based on 3 year
final valuation assumptions and do not take into consideration the preferred distribution status
or the advisor fee as per the investment proposal.
Page 24
Table: Valuation
Sales Multiplier Valuation

Year 1 Year 2 Year 3
Gross Sales $ 733,950.00 $ 820,478.00 $ 847,790.00
Multiplier 1.5 1.5 1.5
Calculated Sales-Based Valuation $ 1,100,925.00 $ 1,230,717.00 $ 1,271,685.00
Deal Terms
Investment Amount 80,000
Equity Shares 20%
Discount Rate 10%
Final Valuation (Sales)

Years Later 3 3
Final Sales 847,790 847,790
Valuation Multiplier (Sales) 1 2
Calculated Final Valuation $ 847,790 $ 1,695,580

Final Payout Amount $ 169,558 $ 339,116
Net Present Value $ 43,083 $ 158,894
Internal Rate of Return 28% 62%
Final Valuation (Earnings)

Years Later 3 3
Final Earnings 106,406 106,406
Valuation Multiplier (Earnings) 10 11
Calculated Final Valuation $ 1,170,466 $ 1,064,060

Finaly Payout Amount $ 212,812 $ 234,093
Net Present Value $ 72,626 $ 87,162
Internal Rate of Return 39% 43%
Page 25
7.4 Break-even Analysis
The Break-even analysis is based on the average first-year projections for total sales by
units.
Break-even Analysis
Monthly Units Break-even 625

Monthly Revenue Break-even $59,341
Assumptions:
Average Per-Unit Revenue $95.01
Average Per-Unit Variable Cost $34.70
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $37,669
Chart: Break-even Analysis
Page 26
7.5 Projected Profit and Loss
Important Notes Regarding Deprecation & Payroll Burden:

1. Depreciation was calculated by depreciating long-term assets over the course of 5 years
plus the principal repayment of a $75,000 dollar loan amortized over the course of 5 years
at a rate of 11%.
2. Payroll is comprised of The Executive Director of Drug and Alcohol Services and the Clinical
Director. During first year of operations their salaries will be $100,000 and $45,000
respectively less 13% for payroll taxes. The second year adds 6% to the Clinical Director's
salary with the Executive Director's salary being $115,000. In the third year, projections
show a raise of 3% for the Clinical Director while the Executive Director's salary will be
$130,000. All salaries are under the current market salary rate for positions at like facilities
in the geographic region.
Our first year's sales number is based on our assumption that we will have secured enough
managed care and SCA contracts while continuing to utilize our network of referrals in order to
reach full capacity by the fourth month of operations. For the subsequent years of operations
noted, we utilized our competitors numbers of units sold over the course of the last 5 years in
combination with our ability to transport admitting clients (which our competitors do not offer)
to determine projected sales revenue.
Direct Costs of Sales reflects labor and relating items to that labor that is directly related to the
number of clients needing service. Other variables used in Direct Labor Costs were
some utilities due to the large fluctuations associated with residential facilities. The full list of
items included in Direct Cost of Sales can be found in Section 5.3.2.
As our brand continues to grow, we feel a significant source of potential revenue will stem from
self-payers. Our offerings at our facility is such that families in a high income bracket will begin
sending their loved ones to The New Program based on our superior offerings to our state-wide
competitors.
Sales growth from year one to two shows a 11.79% rise with years 2 to 3 showing a 3.3%
raise. The industry profile for sales growth is approximately 4.61%
Employee payroll is outsourced, as is all accounting services and operations management.
The advisory fees are paid to investors based on 8% of the total remaining initial investment
calculated monthly.
Page 27
Table: Profit and Loss
Pro Form P&L

2011 2012 2012
Sales $733,950 $820,478 $847,790
Total Direct Cost of Sales $268,042 $299,458 $309,839
Gross Margin $465,908 $521,020 $537,952

Gross Margin % 63.48% 63.50% 63.45%
Expenses
Payroll $126,145 $141,549 $155,844
Payroll Taxes $21,144 $21,151 $23,287
Depreciation $7,224 $11,559 $11,559
Workers Comp $16,848 $17,520 $17,978
Employee Benefits $24,756 $25,493 $26,257
Minor Equipment $3,996 $2,500 $2,800
Licenses & Dues $1,704 $800 $900
Exterminator $756 $750 $750
Fire Safety $756 $600 $600
Sewer $7,500 $7,500 $7,500
Rent $42,000 $42,000 $42,000
Property Insurance $10,500 $10,500 $10,500
Real Estate Taxes $10,500 $10,500 $10,500
Marketing $15,000 $15,000 $15,000
Payroll Billing Services $2,100 $2,450 $2,800
Software $25,000 $12,000 $12,000
Office Supplies $3,450 $4,168 $5,001
Phone, Internet, Mobile $5,400 $5,400 $5,400
Postage $350 $450 $450
Accounting Services $21,000 $21,000 $21,000
Computer Maintenance $300 $500 $700
Management Fees $42,000 $42,000 $42,000
Start-Up Reimbursement $35,000 $0 $0
Advisory Fees $11,200 $12,800 $6,516
Business Privilege Tax $3,000 $3,000 $3,000
Misc. Expense $14,400 $0 $0
Total Operating Expenses $452,029 $411,190 $424,343
Profit Before Interest and Taxes $13,879 $109,830 $113,609

EBITDA $21,103 $121,389 $125,168
Interest Expense $5,566 $4,749 $3,833
Taxes Incurred $255 $3,226 $3,370
Net Profit $8,058 $101,855 $106,406

Net Profit/Sales 1.10% 12.41% 12.55%
Page 28
Chart: Profit Yearly
Chart: Gross Margin Yearly
Page 29
7.6 Projected Cash Flow
The following chart and table summarize the Agency's cash flow. The projections are a
combination of long-term borrowing, short-term borrowing, investments and Agency receipts.
Cash flow is obviously critical to the Agency's success. As we continue to generate positive
cash flow, the goal is to pay down investment monies as well as long-term liabilities.
Table: Cash Flow
Pro Forma Cash Flow 2011 2012 2013

Cash Received
Cash from Operations
Cash Sales $550,463 $615,359 $635,843
Cash from Receivables $147,720 $200,903 $210,617
Subtotal Cash from Operations $698,183 $816,261 $846,459
Additional Cash Received

Non Operating (Other) Income $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $160,000 $0 $0
Subtotal Cash Received $858,183 $816,261 $846,459
Expenditures 2011 2012 2013

Expenditures from Operations
Cash Spending $126,145 $141,549 $155,844
Bill Payments $534,406 $577,150 $573,285
Subtotal Spent on Operations $660,551 $718,699 $729,129
Additional Cash Spent
Non Operating (Other) Expense $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $10,147 $10,989 $11,901
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $50,928 $53,203
Subtotal Cash Spent $670,698 $780,616 $794,233
Net Cash Flow $187,485 $35,646 $52,226

Cash Balance $257,485 $293,131 $345,357
Page 30
7.7 Projected Balance Sheet
The following table shows the projected balance sheet.
Table: Balance Sheet
Pro Forma Balance Sheet 2011 2012 2013

Assets
Current Assets
Cash $257,485 $293,131 $345,357
Accounts Receivable $35,767 $39,984 $41,315
Inventory $0 $0 $0
Other Current Assets $2,500 $2,500 $2,500
Total Current Assets $295,752 $335,615 $389,171
Long-term Assets
Long-term Assets $57,796 $57,796 $57,796
Accumulated Depreciation $7,224 $18,784 $30,343
Total Long-term Assets $50,572 $39,012 $27,453
Total Assets $346,324 $374,627 $416,625
Liabilities and Capital 2011 2012 2013
Current Liabilities
Accounts Payable $58,116 $46,481 $47,177
Current Borrowing $0 $0 $0
Other Current Liabilities $35,000 $35,000 $35,000
Subtotal Current Liabilities $93,116 $81,481 $82,177
Long-term Liabilities $64,853 $53,865 $41,964

Total Liabilities $157,970 $135,345 $124,140
Paid-in Capital $296,836 $296,836 $296,836

Retained Earnings ($116,540) ($159,409) ($110,757)
Earnings $8,058 $101,855 $106,406
Total Capital $188,354 $239,282 $292,484
Total Liabilities and Capital $346,324 $374,627 $416,625
Net Worth $188,354 $239,282 $292,484
Page 31
7.8 Business Ratios
The following table shows the projected business ratios when compared to the Residential
Mental Health and Substance Abuse industry.
Table: Ratios
Ratio Analysis
2011 2012 2013 Industry Profile
Sales Growth n.a. 11.79% 3.33% 4.44%
Percent of Total Assets

Accounts Receivable 10.33% 10.67% 9.92% 18.85%
Inventory 0.00% 0.00% 0.00% 1.46%
Other Current Assets 0.72% 0.67% 0.60% 43.08%
Total Current Assets 85.40% 89.59% 93.41% 63.39%
Long-term Assets 14.60% 10.41% 6.59% 36.61%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 26.89% 21.75% 19.72% 38.66%

Long-term Liabilities 18.73% 14.38% 10.07% 47.43%
Total Liabilities 45.61% 36.13% 29.80% 86.09%
Net Worth 54.39% 63.87% 70.20% 13.91%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 63.48% 63.50% 63.45% 90.49%
Selling, General & Administrative Expenses 62.38% 51.09% 50.90% 45.24%
Advertising Expenses 2.88% 2.58% 2.75% 0.65%
Profit Before Interest and Taxes 1.89% 13.39% 13.40% 5.88%
Main Ratios
Current 318.00% 412.00% 474.00% 1.21
Quick 318.00% 412.00% 474.00% 117.00%
Total Debt to Total Assets 45.61% 36.13% 29.80% 86.09%
Pre-tax Return on Net Worth 4.41% 43.92% 37.53% 169.83%
Pre-tax Return on Assets 2.40% 28.05% 26.35% 23.63%
Additional Ratios 2011 2012 2013

Net Profit Margin 1.10% 12.41% 12.55% n.a
Return on Equity 4.28% 42.57% 36.38% n.a
Activity Ratios
Accounts Receivable Turnover 5.13 5.13 5.13 n.a
Collection Days 57 67 70 n.a
Inventory Turnover 0 0 0 n.a
Accounts Payable Turnover 10.2 12.17 12.17 n.a
Payment Days 27 34 30 n.a
Total Asset Turnover 2.12 2.19 2.03 n.a
Debt Ratios
Debt to Net Worth 0.84 0.57 0.42 n.a
Current Liab. to Liab. 0.59 $1 0.66 n.a
Liquidity Ratios
Net Working Capital $202,636 $254,134 $306,995 n.a
Interest Coverage 2.49 23.13 29.64 n.a
Additional Ratios
Assets to Sales 0.47 0.46 0.49 n.a
Current Debt/Total Assets 27% 22% 20% n.a
Acid Test 2.79 3.63 4.23 n.a
Sales/Net Worth 3.9 3.43 2.9 n.a
Dividend Payout 0 0.5 0.5 n.a
Page 32

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DDAP Licensed Facility Business Plan

Lawrence S. Rinish, Project Manager, CEO

1.0 Executive Summary .................................................................................................................... 3

7.4 Break-even Analysis .............................................................................................................. 26

1.0 Executive Summary

The Service Offerings

Corporation XYZ maintains a willingness to take advantage of available technologies, software,

HealthCare reform also mandates an accelerated development of strategies to ensure an

To continuously develop, strengthen and improve services offered by the Agency.

1.3 Keys to Success

The primary Keys to Success for the facility are:

2.0 Company Summary

2.1 Company Ownership

• Principal Member - Mr. P. Member

2.2 Start-up Summary

Total Start-up Expenses $116,540

Total Requirements $246,836

The treatment components are made up of:

4.0 Market Analysis Summary

HealthChoices is the managed care program for Medicaid eligible persons in

4.1 Market Segmentation

2. Individuals and Families

3. Managed Care Company and

4.2 Target Market Segment Strategy

When marketing to payers it is important to demonstrate our professional ability to provide a

4.3 Service Business Analysis

Of all the substance abuse facilities established in Pennsylvania, approximately 6.2% of

1. Clem-Mar House, Inc. (Edwardsville, PA)

Financial Statistics: 7/01/08 and ending 6/30/09

c. Potential Impact of Strengths

d. Strategies to Thwart Competition

2. Treatment Trends, Inc. (Allentown, PA)

c. Potential Impact of Strengths

d. Strategies to Thwart Competition

4.4 Health Care Reform

5.0 Strategy and Implementation Summary

5.1 Competitive Edge

The keys to our competitive edge:

5.2 Marketing Strategy

5.3 Sales Strategy

5.3.1 Sales Forecast

Table: Sales Projections

Sales Projections 2011 2012 2013

Unit Prices 2011 2012 2013

Direct Unit Costs 2011 2012 2013

Direct Cost of Sales

5.3.2 Direct Cost of Sales

• Contracted Care Services

6.0 Management Summary

6.1 Management Team

6.1 Organizational Structure

6.3 Personnel Plan

7.0 Financial Plan

7.1 Start-up Funding

Company ABC has summarized our start-up funds in the

Table: Start-up Funding

Liabilities and Capital

Additional Investment Requirement $136,836

Loss at Start-up (Start-up Expenses) ($116,540)

Total Capital and Liabilities $130,296

Total Funding $246,836

7.2 Important Assumptions

Sales Multiplier Valuation