Clark Marcus, chairman and CEO of Advanzeon Solutions, Inc., talks with Opportunist’s Managing Editor Leslie Stone about his company’s innovative sleep apnea testing and treatment program for truckers and its mission to bring quality, affordable healthcare to the masses.
Obstructive sleep apnea is a potentially dangerous disorder that occurs when an individual’s breathing is interrupted during sleep. People with untreated sleep apnea repeatedly stop and start breathing—often hundreds of times a night—and are robbed of the deep, restorative sleep they need to function at an optimal level the next day. Chronic sleep deprivation not only results in daytime sleepiness, poor concentration and delayed reflexes, but may also increase a sufferer’s risk of heart attack or heart failure, depression, diabetes, stroke and even cancer. Sleep apnea is also linked to a significantly higher risk of motor vehicle accidents. The AAA Foundation for Traffic Safety estimates that sleepy drivers cause 328,000 motor vehicle crashes—6,400 of which are fatal—in the United States each year. Truckers, who spend the majority of their time on the road, are at significant risk of developing sleep apnea. As a result, the National Transportation Safety Board (NTSB) in January of this year asked trucking regulators to require sleep apnea screening.
Advanzeon Solutions, Inc. (OTCMKTS: CHCR), headquartered in Tampa, Fla., through its wholly-owned subsidiary, Pharmacy Value Management Solutions, Inc. (collectively, the “Company”) anticipated almost a year and a half ago impending regulations by the Department of Transportation (DOT) regarding sleep apnea. Up to that point in time, while it was widely suspected that sleep apnea was the cause of a number of motor vehicle accidents, the fact that it was indeed the cause had not been acknowledged—but it was coming. The industry, in general, had not been quick to react to the problem, and even if one were suspected of having sleep apnea (a not uncommon pulmonary disorder), the cost for testing and treatment was not only inefficient, but extremely high. About 18 months ago, the Company dedicated a substantial amount of its energies and financial resources to developing a national, efficient and affordable sleep apnea screening/testing and treatment program designed to address the specific problem of sleep apnea and, in particular, a program designed to safeguard the driver and address what the Company perceived as a possible epidemic.
Over the following year and a half, the Company positioned itself for the time when the DOT would issue a mandate that all drivers with a commercial driver’s license would be required, as part of their already mandated medical exam, to undergo preliminary screening/testing for sleep apnea. This event occurred, officially, in May of 2014. By that time, the Company was, to the best knowledge of management, the only Company capable of delivering to the driver, and the public in general, a complete sleep apnea program on a national scale at an affordable price.
Through both historically-based and recently created relationships with high-level Teamsters officials and business leaders, the Company was able to successfully negotiate agreements with substantial numbers of Teamsters whereby the Company’s sleep apnea program would be automatically included in numerous Teamsters health and welfare programs as a fully paid benefit, coast to coast. The Company also pursued private clinics, as well as medical practices, and was able to conclude agreements whereby the Company would serve as the various clinics’ and medical practices’ sleep apnea screening/testing and treatment program. Simultaneously, the Company expanded its staff to facilitate the expanding of its national footprint of clinics and medical practices capable of servicing both a commercial and non-commercial population. Software was put in place to keep costs down; appropriate contractual arrangements were made with leading suppliers of sleep apnea screening/testing and treatment equipment, and the nation’s first—to management’s best knowledge—and only “soup-to-nuts” sleep apnea program was full blown by the time the national regulations became effective. The Company self-funded this endeavor.
The Company’s election to invest so heavily in a healthcare subset—sleep apnea—at a time well before the tremendous need for such a program existed was designed and executed by the Company’s senior management team. Led by its CEO, Clark A. Marcus, the Company reallocated its resources away from additional development of its behavioral health and pharmacy programs, placing its greatest emphasis on sleep apnea.
Marcus is no stranger to healthcare or public companies, having built successful public and private companies over the last 40 years. During the last four decades, he has developed unusually strong relationships with both business and political leaders. He has served as chairman and CEO of a number of successful healthcare distribution and pharmacy companies, bringing substantial value to early investors and his shareholders, in general; served our country as a member of the U.S. Chamber of Commerce Corporate Advisory Council; and served on the board of directors of America’s Agenda: Health Care For All, along with a significant number of notable political, labor and government leaders with a mandate to reduce the ever-spiraling cost of healthcare in this country.
Simultaneously with his business endeavors, Marcus also served as senior partner of a number of NY-based law firms and successfully prosecuted several anti-trust cases affiliating with the U.S. Department of Justice.
Opportunist: Can you tell us a little about your relationship with the Teamsters and how your program will be implemented?
Clark Marcus: I appreciate the focus of your question being the Teamsters since that was the Company’s first labor breakthrough by way of entering into a contractual arrangement with a large Teamsters health and welfare fund in Southern California. That agreement provided, among other things, for the Company to provide sleep apnea screening/testing and treatment through its SleepMaster Solutions™ Program to all Teamsters Trust Fund members operating commercial motor vehicles in California. That program became effective July 1, 2015. The Company has been able to expand its relationship with the Teamsters, dramatically, and believes it is fair to say that we now dominate that sector of healthcare in the Western U.S. region.
Implementation, at this point, for the Company is not particularly difficult. We have built a national provider and clinic network, which we are continually expanding; we have the contractual relationships to have a more than adequate supply of screening/testing and treatment equipment delivered to the drivers on a moment’s notice; we have the ability to provide 24-hour turnaround with respect to screening/testing results; and, we have a solid relationship with our Teamster friends. I do not know of any entity in the entire country that can boast of such a wide range of capabilities ‘under one roof.’
What is interesting is the synergistic effect of what we built in that not only do we have the ability to send the drivers to a screening/testing facility in a timely manner, those same testing facilities have begun to use our sleep apnea expertise for their own non-Teamster related patients. From an economic perspective, it is a double win for the Company and, most importantly, it is all done at an affordable price.
Opportunist: Where are the tests administered?
Clark Marcus: The most important thing about the tests, from a Teamster’s point of view, is not necessarily where they are administered, but how. The Teamster driver is constantly on the road working long hours under arduous conditions, oft times, and literally does not have time to stop for what he perceives to be a ‘nuisance’ exam. His focus is earning a living and spending as few dollars as he can paying for the increased costs of medical programs. Our job is to not only make the price of this screening/testing affordable, but to make it convenient. Up to now, most sleep apnea screenings/tests have taken place at a sleep clinic; involve trying to fall asleep in a strange bed and in a strange location; and, generally, takes more than one session. Equipment exists that can provide effective screening/testing which can be performed in the comfort and convenience of one’s own home or even the cab of a truck. That is the program we developed with top of the line equipment supported by a medical diagnosis at the end of the test. It is fast, extremely convenient, takes place on the driver’s time schedule, as opposed to the clinics, and is affordable to the Teamsters Trust Fund. It saves the driver and the Trust Fund time and money.
Opportunist: What is the treatment for sleep apnea?
Clark Marcus: If testing determines a driver has sleep apnea, treatment is most often accomplished by way of a CPAP or Bi-Pap machine. This treatment is a small device kept at the driver’s bedside and worn at night during sleep. The device gently moves air and moisture into the driver’s airway to keep the airway from closing and, hence, stopping the sleep apnea. For our union friends, I might mention our machines are made right here in the good old U.S. of A. Drivers report ‘life-changing’ results from undergoing treatment. Oftentimes, this condition they were unaware of, when treated, becomes a source of increased energy, renewed vitality, enhanced productivity and alertness at work. The Teamsters are ecstatic because of the benefits to the drivers but also because our service is more effective, yet considerably less expensive, than traditional methods of testing and treatment. So what we have here is an entire program that seamlessly evaluates the driver for sleep apnea, coordinates treatment for sleep apnea, when indicated, and keeps the driver on the road healthy and safe.
Opportunist: What are the benefits of treatment?
Clark Marcus: When someone with sleep apnea is properly treated, their general health improves and the cost to the HMO, employer or union goes down. There is a high correlation between sleep apnea and other health conditions. We focus on sleep apnea from a business standpoint because, first and foremost, we believe we can do a lot of good. Second, we have strong access to unions and clinic operations. Sleep apnea, while widespread, hasn’t hit the radar yet. The clinic systems and companies we are familiar with want to engage this phenomenon but don’t have the ability to construct a complete sleep apnea program. The Company allows these clinics to install us as a ‘plug and play’ modality that allows them to offer our services, benefit from the process and not have to invest in the infrastructure and learning curve necessary to implement such a service. We have almost a two-year jump on everyone else that didn’t see this opportunity coming. We are positioned to operate our program in multiple clinic facilities in multiple states. Our program is being widely accepted due to the inherent benefits it brings to the physicians, the clinic program, and the patients. It is truly an elegant win-win scenario.
Opportunist: How was the Company able to build this program for sleep apnea testing and management?
Clark Marcus: In my view, when dealing with healthcare programs that require clinics, having the largest and most efficient network of clinics is the true key to the success of the program. Developing the right contractual relationships on a national scale with a sufficient number of clinics to handle the anticipated population is critical in this regard. That is exactly what the Company endeavored to do and, I dare say, it was, and continues to be, successful in this endeavor. The network serves multiple functions. It not only services the entities, be they union or non-union, that the Company contracts with, but also, as I said before, facilitates the clinics, themselves, in utilizing the Company’s expertise and capabilities to service the clinic’s patients. Simply put, the need for sleep apnea expertise has now been recognized; and be they clinics, HMOs, etc., we are confident they will all eventually be forced into the position of either building their own network or identifying a responsible vendor from whom they can ‘buy’ or ‘lease’ the sleep apnea services.
Providers have almost 100 percent embraced our program because they recognize that a significant number of diseases are related to sleep apnea, and we have the ability to address the issue for them at an affordable price. We offer physicians an important ‘tool in their tool shed’ to provide state-of-the-art medicine for their patients with very little additional effort on their part. Knowing if a patient’s sluggish behavior is related to depression, heart disease or sleep apnea becomes a critical factor in the treatment and long-term health of that patient. Once they had that realization, they began saying screening/testing for sleep apnea is necessary. We are the first company with that program in place! It’s the birth of an entirely new area of healthcare that will very soon become commonplace—and we have the infrastructure, scalability and contacts to service this immense and growing need.
Opportunist: How did you become involved with Advanzeon?
Clark Marcus: During my career I have been frequently solicited to take a look at other business ventures. Typically, these are fledgling companies with financial needs or older businesses that aren’t doing as well as we believe they could. Advanzeon was a 40-plus-year-old business when I was introduced to it, and it had been a high-flying NASDAQ company in the healthcare space trading in the $40 range. At one point, it owned bricks and mortar facilities specializing in behavioral health. Later on, it abandoned the bricks and mortar and began treating behavioral health through various networks across the country. It had an excellent reputation and looked pretty good from an industry perspective. From a financial perspective, however, it was not so good and, from a management perspective, needed direction. My colleagues and I are skilled in both those areas. We decided to build a strong network for behavioral health, primarily to keep costs down, and within 18 months, we had a footprint in 46 or 47 states, where we modified the way they were building business.
Opportunist: How so?
Clark Marcus: The Company was, when we became involved, still processing claims manually. We enhanced their electronic capability by putting systems in place and hiring people, including system experts. We generally cut costs, increased the size of the network and increased efficiencies such that fewer staff can accomplish more by working with state-of-the-art facilities. That, in itself, was quite a feat because the Company was vastly overspending on inefficient use of human resources and talent. We also recognized that the margin in behavioral health is rather thin and, given what we perceived to be the direction in healthcare, it was likely to get thinner. It was for that reason that we shifted a significant number of our personnel away from behavioral health with a redirected focus on sleep apnea.
Up until six years ago, the Company was only doing behavioral health. Because of my personal relationships in Washington, I had access to government and non-government information as to which direction healthcare was going to take. I perceived an opportunity in the area of sleep apnea and acted. Now, after all the high-profile accidents, like the Walmart truck accident involving Tracy Morgan’s limo in 2014, people are becoming more aware of the consequences of sleep-deprived driving. Whether or not that was the cause of the Walmart accident, the fact remains that even the suspicion that the driver suffered from sleep apnea raises both public and government awareness of the problem. We were, all the while, preparing for such awareness to occur.
The second aspect is that healthcare costs in the United States are spiraling out of control. When you peel layers from the onion, you find these high costs primarily reside in pharmacy spending. It’s totally out of control, but it doesn’t have to be. You can cut an HMO’s pharmacy spend, in many instances, by 30 percent if you trim the fat. At a speaking engagement about six months ago, I received a standing ovation after I talked about bringing the cost of healthcare down by revamping the pharmacy benefit management aspect of healthcare. It can be done.
Opportunist: What sets the Company apart from the competition?
Clark Marcus: I am not sure the Company has any real competition at this time. While there are others who engage in sleep apnea programs and can provide potential customers with one or two components of that program, neither I nor my management team are aware of any company capable of providing the full range of services provided by the Company. And, make no mistake about it, the full range is exactly what is needed for a variety of reasons, including time efficiency and cost. At a number of meetings with potential clients, we have frankly been told that we are the only company they have been looking at to provide this type of program as an integral part of the general healthcare benefits they provide to their members. This, they say, is because we are the only company they have found with the wide range of not only the capability of providing a full-services operation, but the knowledge of that segment of the healthcare industry. Keep in mind that our job is to service the patient members of those populations and provide a high-quality of service such that the management of those organizations does not get a deluge of phone call complaints. That is what we do, and we are the best in the business at it. I don’t believe we have any serious competition in this space, yet. Having said that, we actually would welcome competition since, by contrast, we would simply look better and better in the process.
At the risk of putting forth, perhaps, an inappropriate analogy, one of our major clinic operators described it this way: ‘Sleep Apnea is the hamburger, and the Company is McDonalds.’ I like this analogy because it accurately captures the sense that we have taken what is a well-known phenomenon (hamburger/sleep apnea) that no one was paying attention to, and created a system to deliver it that was immediately recognized and embraced. So much so that it became a national and international phenomenon.
Opportunist: Does your sleep apnea program have applications beyond the trucking industry?
Clark Marcus: Yes. As we discussed earlier, the general healthcare market in the form of clinics, hospitals and general medical practice offices provides an enormous opportunity for our services. We have already dedicated a division to service the labor market and are immediately reaping substantial rewards. We also recognize that this is just the tip of the iceberg and we fully intend to be the dominant player in the vast market. Secondly, because we also have substantial access to private companies that employ CDL [commercial driver’s license] drivers, a triad exists between sleep apnea, behavioral health and pharmacy. Once we infuse our sleep apnea program, which is the easiest access point, we still have our behavioral health and pharmacy management programs. We fully expect to be able to successfully approach these entities and offer to them both our behavioral health and pharmacy programs, utilizing our sleep apnea success as a credibility platform.
Opportunist: We understand the company anticipates ‘disrupting the so-called conventional models and setting new standards in health care management.’ What exactly does that entail?
Clark Marcus: I am not sure I would use the word, ‘disrupting,’ but I would certainly subscribe to the word, ‘change.’ We have talked about the sleep apnea program and our belief that, to date, we are the only ‘one-stop shop’ in the nation with a tremendous head start on any potential competition. The fact that we have invested our time and money in this space speaks volumes as to our belief in this potential market. In this regard, we are not just the first ‘on the block,’ but we have also captured a significant market share with exponential growth anticipated. We believe it will be extremely difficult, when a competitor enters the picture, for that competitor to catch up or otherwise effectively compete—especially in the market segment we have identified and pursued vigorously.
As to pharmacy, we believe the industry has been burdened over the 30 thirty years with the business model that is good for the pharmacy benefits managers (PBMs), but not so good for the industry or the public, in general. Pharmacy costs have literally spiraled out of control and given a number of factors, including the ‘baby boomers’ who are entering the stage of their life where increased pharmaceuticals are required, these pharmacy costs must be brought under control or they will crush the nation’s financial ability to keep pace. Over the last two years, we developed a pharmacy management program and are now positioned to offer our services to a wide range of potential clients as a PBM. In addition, we are able to guarantee a cost reduction at a minimum of 10 percent off the entity’s prior year’s pharmacy spend, as well as guarantee those rates for a three-year period. We are currently negotiating agreements to that effect. Should we be successful in that regard, we will not only take a major step in substantially reducing the overall cost of healthcare in this country, but provide the Company with another profit center as a fair profit has been automatically built into the program.
We have also taken steps to build out a more robust and cost-effective behavioral health program, and with the good reputation already enjoyed by the Company for a substantial number of years, we believe this, too, will provide a platform aimed at Company success. It is not difficult, when one looks at those three healthcare segments, to realize how they interrelate, as bad behavioral health can easily lead to a sleep apnea problem and a sleep apnea problem can equally easily lead to a need for pharmaceuticals. Fix one and you have a reasonable chance of fixing all three with the same general program. If one were to choose to call our approach ‘disruptive,’ so be it; but like every other industry, corrections must be made to accommodate changing times or, put another way, outmoded models. The Company is perfectly positioned to address all three healthcare components, and with such substantial access at both the commercial and non-commercial level, we are confident the Company will ultimately be able to deliver all three components to its clients.
Opportunist: Is there anything you would like to say to potential investors?
Clark Marcus: I and my partners are, in the true sense of the word, active investors. We look at companies’ existing positions; analyze whether or not we can add value to those companies and, if we are successful in adding value, would we be satisfied with the return we believe we can achieve on our investment? If we like what we see, we generally infuse substantial amounts of our and our associates’ private capital into the venture. We liked what we saw in the Company. We liked what we perceived we could accomplish in bringing value to the Company. We believe we have now positioned the Company in such a way that we are likely to achieve a substantial return on our investment. Simply put, we think the Company is in terrific shape for substantial growth—and very quickly. The program is fully developed; contracts are in place; positive cash flow has started and material growth seems almost inevitable. All investors look at potential investments differently. We looked not only at the Company but at the people behind it, and I have been known to say that you have to bet as much on the jockey as you do on the horse. If my team is viewed as the jockey and the Company, the horse, I believe investors would be well served by aligning themselves with the Company and its future.
Opportunist: What do you find most rewarding about your work with Advanzeon?
Clark Marcus: There are several business components of my work that give me extreme pleasure. Obviously, one of those components is ‘being right and doing a good job.’ I think our view of the Company, the direction of healthcare and our abilities to move the Company in that direction faster than others was correct. That, personally, gives me great satisfaction; and, it’s always exciting when one realizes that the potential for success is literally limitless when you stay ahead of the curve and work with a team of people, at all levels, who help make that success a possibility. By the same token, it almost always comes down to the people—not only the people you work with internally, but the people you meet along the way to service. With the Company, I am privileged not only to work with a tremendous team, which includes management personnel that I have successfully worked with in the past on other ventures, but also with a significant number of clients and potential clients, many of whom I have also known over the years. Making their life easier and more successful makes my life better. Financial success, quite frankly, takes a back seat to the personal success achieved through relationships.
Opportunist: Where do you see the Company in the next five to ten years?
Clark Marcus: I believe my answers to your previous questions provide you with a literal roadmap to where I see the Company on a going-forward basis. I don’t think a 10-year forecast is appropriate at this time, but I do think immediate growth is. In the not-too-distant future, I and my team see the Company as, far and away, the leader in the healthcare space we discussed. I believe all others will be playing catch up and imitation. I believe our growth potential, even from that perspective, will be substantial. To go back to the McDonald’s analogy, our team believes the analogy setting, and while others will try to copy what we do, even that effort will only serve to make us bigger and stronger. We have had a number of bumps in the road in getting from point to point, but as we moved forward, those bumps became fewer and fewer. The field in front of us is wide open. We do not currently perceive any real competition ‘nipping at our heels.’ To our knowledge, we have the only complete sleep apnea program in place; we have the contacts, the contracts, the personal relationships and the internal framework to execute; and, our program can be expanded, modularly, at will with little additional capital needed to do so. We are confident as to the Company’s future.
Leslie Stone is an award-winning writer, editor and journalist with more than two decades of experience covering business, finance, real estate and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides between Florida and Michigan. Follow Leslie on Twitter: @lescstone.
Advanzeon Solutions, Inc.