Cogent Healthcare, Inc. Receives $15 Million in New Funding; Cogent Model Improves Patient Care for Less Cost, Makes Better Use of Scarce Health Care Resources.

Business Editors & Health/Medical Writers

LAGUNA HILLS, Calif.--(BW HealthWire)--May 7, 2002

Cogent Healthcare, Inc., one of the nation's leading providers of inpatient physician management services to health plans, hospitals and health systems, today announced it has received $15 million in additional funding from four previous investors -- Crosspoint Venture Partners, Accel Venture Partners, Mission Ventures and Versant Ventures -- and one new investor, Conning Capital Partners.

"This round of funding will support Cogent's continued expansion and build on our track record of quality and efficiency of inpatient care," said Alan Puzarne, CEO of Cogent Healthcare. "Cogent's success demonstrates that a comprehensive inpatient management program can be a solution for many of the problems besetting our health care system by providing cost-effective care to the uninsured, Medicaid and Medicare patients; improving the continuity of care; and even removing blockages and delays in the emergency room."

At the core of the Cogent model are hospitalist physicians -- physicians who specialize in the care of hospitalized patients and who are available 24 hours a day, seven days a week to attend to the changing needs of the patient. These physicians are not employees, but respected doctors already practicing in the community who want to focus on inpatient care. Cogent supports the hospitalist physician with clinical staffing, "best practices" guidelines, communication and data collection systems so the physician can concentrate on clinical care delivery.

"There's a clear need to improve the quality and reduce the cost of inpatient care," said Don Milder, general partner emeritus, Crosspoint Venture Partners, and managing director, Versant Ventures, two firms previously participating in two rounds of funding for Cogent. "Cogent's services and systems help direct care and monitor results and have proven to be highly effective for its clients. We believe that within five years, most, if not all, hospitals will utilize hospitalist services and that Cogent will be a leader in the field."

Results from Cogent programs exceed national averages recently reported in the Journal of the American Medical Association, saving nearly three times as much as other programs while improving quality of care and patient satisfaction, an early indication of Cogent's staying power in an industry perpetually searching for better outcomes at a better price.

"Cogent delivers the right care at the right time in the right setting for a hospitalized patient through its network of hospitalist physicians and clinical care coordinators," said Diane M. Daych, a principal at Conning Capital Partners. "They are changing the way inpatient care is being delivered by providing high quality, efficient care with high patient satisfaction. Cogent represents a compelling investment opportunity for Conning Capital Partners as its services make tremendous business sense while also improving the delivery of health care."

By being available around-the-clock, hospitalists are able to attend to a patient's changing condition as it occurs rather than having care delayed until the primary care physician can arrive from his or her practice. The critical care skills of these specialists are important factors in helping today's more critically ill hospital patients obtain the level of care they need. As a result, hospitalists improve the quality of care patients receive and enhance the efficiency of the care process. By delivering more efficient and timely care, the time the patient spends in the hospital may be reduced.

"Hospital, physician, and patient acceptance of hospitalists is on the rise, and Cogent offers an effective approach to organizing and managing hospitalists programs," said Barbara Lubash, managing director, Versant Ventures. "Cogent was among the pioneers in developing and deploying the hospitalist model of care, offering hospitals and payers an affordable way to achieve and sustain high quality inpatient care. The company's demonstrated results give investors confidence that the Cogent approach is delivering compelling value, and therefore, we believe the company will grow rapidly."

"Accel Partners was a founding institutional venture investor because we are committed to funding innovation in health care services," said Eugene D. Hill, III, a former partner at Accel Partners, and currently a general partner at Schroder Ventures Life Sciences. "The appeal of Cogent is that hospitalists represent a paradigm shift in inpatient care management: The benefits are improved quality and patient satisfaction and reduced costs through more timely and appropriate resource utilization."

For more information on Cogent Healthcare, contact Bill Behnke at 949/699-6000.

About Cogent Healthcare, Inc.

Cogent Healthcare, Inc. (www.cogenthealthcare.com) is a leading provider of services that improve the well-being of hospitalized patients while reducing their associated costs through the creation and management of inpatient-based physician networks. Its vision is to improve care and efficiency by reducing variations in care, establishing best practices, identifying and removing barriers to efficient care, and measuring outcomes. To this end, the company provides comprehensive programs in clinical care staffing, communication, and data management that support the hospitalist physician in the delivery of inpatient care.

Cogent Healthcare's programs are currently in 11 major markets throughout the United States, covering more than 2 million lives. Cogent clients include many of the nation's largest health plans such as United Healthcare, Aetna, BlueCross/BlueShield, Humana, and Kaiser Permanente, plus leading hospitals and hospital systems including Intermountain Healthcare, Baptist Health Systems in Florida and Texas and St. Vincent's Medical Center in Santa Fe, New Mexico.

In addition to traditional hospitalist programs, the company partners with Kaiser Permanente, the nation's largest health maintenance organization (HMO), which has 2.7 million members in Southern California, to provide hospitalists to handle emergency care sought by its members at non-Kaiser hospitals.

In May 2000, Cogent Healthcare also launched the first Internet-based continuing medical educational program for hospitalist physicians. Its CME programs for physicians, nurses and pharmacists can be accessed at the company's website, www.cogenthealthcare.com.

About Crosspoint Venture Partners

Crosspoint Venture Partners (www.cpvp.com), a leading early-stage venture capital firm, leverages its base of $2 billion to provide the financial means and strategic guidance that enables development and growth of important new enterprises. The firm focuses on two emerging market segments: B2B, including Vertical Service Providers, Collaborative Commerce Networks as well as the Communications Infrastructure segment. Crosspoint's portfolio has achieved record returns with landmark investments in Ariba, Inc., Avanex Corporation, Brocade Communications System, Covad Communications, Digital Island, Inc., Efficient Networks, Inc., Foundry Networks, Inc., and Juniper Networks, Inc. Formed in 1970, the company has offices in both Woodside and Irvine, Calif., and can be reached at 650/851-7600 or [e-mail]

About Conning Capital Partners

Conning Capital Partners, (www.ConningCapital.com), a unit of Conning & Company (Member: NASD/SIPC) and part of the Swiss Re Group, is a prominent investor in financial services firms. Headquartered in Hartford, Connecticut, Conning Capital Partners has approximately $600 million under management and invests in a wide variety of financial services and technology companies, including software, brokerage, banking, insurance and health-care services companies. For more information, go to www.conningcapital.com.

About Mission Ventures

Mission Ventures helps build successful enterprises in Southern California and creates superior returns on investment for its investors. This is accomplished by investing in the most promising early-stage companies in high growth, emerging markets, and providing significant assistance to those companies as they develop. The Partnership brings value-added capital, experience, management talent, and guidance to the most outstanding and innovative ideas and entrepreneurs in the region.

About Versant Ventures

Versant Ventures, founded in 1999, is a leading health-care-focused venture capital firm specializing in early-stage investments in medical devices, biotechnology and pharmaceuticals, health-care services and health-care information technology. Versant's seasoned investing team, with more than 80 years of venture investment experience and more than 175 years of operating experience, raised its first fund in November 1999. The firm closed a $400 million fund in December 2001, for a total of $670 million under management. Offices are located in Menlo Park and Newport Beach, California.