Small-Cap Investor Forum

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Pacific Health Care Organization, Inc. (PFHO) Limiting Workers’ Compensation Expenses with Cost Containment Programs

Pacific Health Care Organization, Inc. (OTCQB: PFHO), through its subsidiaries, engages in the management and administration of health care organizations (HCOs) and managed provider networks in California. Leveraging a network of medical providers, the company serves the workers’ compensation industry with two unique HCOs designed to offer choice to injured workers. In total, Pacific Health’s two HCO-certified programs, operating under its Medex subsidiary, have contracted more than 3,900 individual providers and clinics, as well as hospitals, pharmacies, rehabilitation centers and other ancillary services, in order to provide comprehensive medical services to clients across the Golden State.

According to data from the Workers’ Compensation Insurance Rating Bureau of California (WCIRB), the state’s workers’ compensation insurance system delivers medical and wage replacement benefits to roughly 800,000 injured workers each year (http://dtn.fm/42MQj). With a high frequency of permanent disability claims and a higher-than-average cost of handling claims in the state, California’s workers’ compensation premiums are the highest in the country. The WCIRB goes on to report that these premiums have continued to grow by double-digit percentages in recent years, spiking 11 percent from 2013 to 2014 alone. These increases have been attributed to a number of factors, including rising medical costs, inflation, fraud and other factors.

Medex aims to insulate employers from these rising costs without negatively impacting the quality of coverage and treatment received by employees. The company’s cost containment programs have been proven to drastically reduce workers’ compensation-related costs for employers. These programs include a certified HCO that features access to an exclusive, specialized network of medical providers; a medical provider network (MPN) that offers less complicated guidelines but provides less control for clients over employee’s claims; and an integrated HCO + MPN program that combines the benefits of the two programs in order to maximize medical control and minimize claim cost.

PFHO was incorporated in 1970 and is based in Newport Beach, California. The company is led by an experienced management team headed by chairman and Chief Executive Officer Tom Kubota, who has served in these positions since 2001. Kubota is joined by Fred Odaka, PFHO’s chief financial officer, who has been with the company since August 2008.

For more information, visit www.PacificHealthCareOrganization.com