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HSNC data processing contracts negotiated during the past 20 months --March, 1969 <br />through October, 1970. <br />March, 1969: HSNC entered into a contract with .Computer Time Sharing <br />Corporation in Palo Alto to provide data processing services. <br />This company during 1968 had sales of $373, 000 with a net <br />loss of $260, 000. To quote from Mr. Johnson at that time, <br />"The modern hospital must computerize to meet the increasing <br />administrative demands which accompany improved and <br />extended medical care. " This operation for HSNC never did <br />get off the ground. <br />September, 1969: <br />7 \ <br />June 27, 1970: <br />HSNC entered into a contract with Medical Computer Systems, Inc. , <br />of Dallas, Texas to perform their data processing services. <br />This company during five months ended May 31, had sales of <br />$445, 716 and expenses of $881, 978, resulting in a net loss of <br />$436, 262. These losses increased substantially and for the <br />year 1969, Xledical Computer Systems, Inc. , had gross revenues <br />of $1, 317, 000 with net losses of $2,120, 000. The company also <br />capitalized programs which indicates that their negative cash flow <br />was probably closer to $3, 000, 000. HSNC was aware of this <br />company's financial condition when they negotiated their contract. <br />Nine months after HSNC started doing business with Medical <br />Computer Systems, Inc. , the system was still not operating <br />satisfactorily, even though Eden Hospital had been on the system <br />since December, 1969. Medical Computer Systems, Inc., was <br />unable to perform and due to their huge financial losses, attempted <br />to negotiate a more expensive contract. This was refused by HS. C <br />however, two of the principles in Medical Computer Systems, Inc. , <br />Air. O. B. Frasier and Mr. James Reed left Medical Computer <br />Systems, Inc. and formed a new company in Houston, Texas <br />called Medical Dimensions. HSNC then contacted with the two <br />men who proved their incapability to convert a previous system, <br />to again convert the hospitals to another company. The financial <br />status of Medical Dimensions is unknown. <br />One must ask some very serious questions as to why men who are in very responsible <br />financial positions would continue to make the same extremely poor business decisions. <br />,s f <br />