1. Building an Economic Cluster for Healthcare Technology in Georgia Mark Reiboldt, Vice President Coker Capital Advisors LLC July 22, 2010

2. Atlanta and the HCIT Economic Cluster Why is Silicon Valley the center of the technology world? What is the significance of Research Triangle on life sciences? How did Detroit become the epicenter of the auto industry? The primary characteristic that these regions and others like it share is explained in an aspect of economic theory known as “Cluster Economics,” which was coined by the famous strategy expert Michael Porter of the Harvard Business School. We will be considering the healthcare IT (HCIT) industry in Georgia and its significance on the broader economy. We will also explore how the rich combination of technology leaders and healthcare industry organizations have been laying the foundation for a new economic cluster in Atlanta and throughout the State to ultimately form the basis of Georgia emerging as the “Silicon Valley of Healthcare IT.” And finally, we will explore the potential benefits of such a model in terms of benefitting Georgia’s private business sector as well as the social and community benefits that ultimately make economic clusters so valuable to a region’s economic infrastructure and growth. Why discuss economic clusters in the context of healthcare IT?

3. Economic Clusters 101 Geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Considered to increase the productivity with which companies can compete, nationally and globally. Alfred Marshall (Agglomeration in urban studies) Michael Porter (The Competitive Advantage of Nations, 1990) Paul Krugman (Geography and Trade) Common Types: Geographical Sectoral Horizontal Vertical What is an economic cluster?

4. Economic Clusters 101 Clusters typically impact competition within a given market in the following ways … Increasing productivity of companies involved Driving innovation within industry / sector Stimulates new businesses within the field Geographical / Regional clusters emerge when … There are enough resources and competences amassed to reach a critical threshold; The cluster represents a key position in a given economic branch of activity; There is a decisive sustainable competitive advantage over other places, or even a world supremacy in that field. Impact of economic clusters on competition (Porter)

5. Examples of Economic Clusters Silicon Valley – Technology Research Triangle – Medical Technology Charles River (Boston) – Life Sciences Detroit – Auto Industry Delaware – Corporate Registration Nevada – Gaming & Entertainment Houston – Energy Switzerland – Banking Wall Street – Financial Services Nashville – Healthcare Services Despite representing completely different industries and having entirely different backgrounds, economic clusters typically have some common characteristics Key Traits Catalyst for attracting companies / industry to a region or cluster Some degree of value for participants beyond geography Model for long-term growth and sustainability exists

6. Nashville Health Care Council’s Nashville Health Care Industry Family Tree (2009)

7. Value of Clusters Competition Synergies Economies of Scale / Scope “Keep your friends close and enemies closer” Regulatory / Policy Incentives Group Leveraging Opportunities How do companies benefit?

8. Value of Clusters Employment / Career Growth Training / Workforce Development Revenues / Financial Value Tangential Awareness (cottage industries, etc) Downstream Benefits (housing, education, etc) Pleasant, attractive places attract new people How do communities benefit? In order for an economic cluster to truly pose long-term value, there must be an efficient combination of both financial valueand economic value, which are distinctly different characteristics

9. Making the Case for HCIT in Atlanta / Georgia Georgia represents the largest concentration of revenues from HCIT companies The value of Georgia’s HCIT industry competes with entire REGIONS

10. Making the Case for HCIT in Georgia Twenty percent of the largest publicly-traded HCIT firms are based in Georgia As a region, Georgia ranks 3rd in terms of market cap and 4th in revenues As a state, Georgia comprises the most market cap and revenues among US-based HCIT companies None of these data points account for or include those companies with headquarters outside of Georgia but with significant operations (and revenues) in the State This also does not include smaller growth companies Startups Incubation-stage companies Academic and government affiliated entities

12. Over $35 billion in revenues allocated to HCIT in Metro Atlanta areaMcKesson/Relay Jackson Health Systems Matria Navicure Novo Clear Wave Greenway

13. Other Advantages (Besides Geography) Transportation (Hartsfield) Innovation coming out of Universities Significant healthcare provider market Innovative nature of regional healthcare providers Proximity to complementary areas Cost of living, environment, people, jobs, etc The value is not entirely just about location of existing HCIT companies

14. Making the Case for HCIT in Georgia Research Triangle Medical Technologies Nashville Healthcare Services Approx. 18-25% of HCIT revenues and over 80% of all healthcare industry revenues Atlanta Healthcare IT *Does not account for companies with corporate HQ’s outside the region despite the majority of HCIT related revenue, operations and personnel being located in the Southeast (e.g., MCK revenue = $108bn, approx 35-40% of which comes from HCIT)

15. Questions & Contacts Questions? Mark Reiboldt Vice President O: 678-832-2004 M: 678-637-2040 F: 678-832-2016 markreiboldt@cokercapital.com www.CokerCapital.com