Because HCFA can fine physicians personally for discrepancies between the medical record and the corresponding charges, VeriType's products will be targeted at individual physicians. Initial emphasis will be attending physicians at teaching hospitals. These physicians are liable not only for their own documentation and billing, but also for that of their residents. VeriType will also target physicians-in-training to introduce VeriType analysis at an early stage in their education.

DEMOGRAPHICS
The American Medical Association estimates that there are 779,000 practicing physicians in the United States. More than 50% of these physicians are specialists and 92,000 are physicians- in-training. The eight modules that VeriType plans to launch in the first three years, beginning with Cardiology, are applicable to 323,000 specialists, or 41% of the physicians actively practicing. VeriType targets selling to 2% of this population. VeriType will also target appropriate allied health professionals, such as Nurse Practitioners and Physician Assistants. Clinicians in our target markets are located in all geographic regions of the United States, include all ages, both sexes, and practice in both public and private settings.

PSYCHOGRAPHICS
Based on the speed with which physicians have adopted other types of technology to automate their practices, such as voice dictation for charts, and more recently, voice recognition technology and expert systems for diagnostic purposes, there is evidence that clinicians will accept the VeriType product. Physicians tend to be early adopters of new technology; anything that reduces paperwork and makes their job easier, such as VeriType analysis, is quickly assimilated. Physicians also gravitate towards technology that allows them to control their environment and their time, freeing up more time to interact with patients. The point of service chart review that VeriType offers addresses the less desirable task of reimbursement control in a quick and efficient manner, thus freeing up more time for patient care.

PURCHASING PATTERNS AND BUYING SENSITIVITY
In the current corporate medical environment, capital equipment purchases above $500 usually require authorization. Our software is moderately priced at $7,500 + support, and will require authorization. The price, including the cost of a current desktop system to handle voice and text recognition applications, is still far less than the cost of a single fine for HCFA non-compliance. This combined with revenue enhancement and education makes the purchase easily justifiable. For example, at the University of Arizona Health Sciences Center department of Cardiology, physicians calculated that $250,000 in quarterly billing resulted in only $160,000 in reimbursement because of inadequate details in the documentation process. Using VeriType analysis, if a physician were to recover an additional 10% in reimbursement for legitimate services rendered, the software would pay for itself in less than one quarter.