Dolev Rafaeli: So XTRAC today uses three CPT codes, 969, 20, 21 and 22, which are used for treatment of areas of – skin areas that are up to 250 square centimeters between 250 and 500 and above 500. And these three reimbursement codes pay to the physician an average of about $180 per treatment. There’s a scale. There’s three codes and different payouts, but about $180. Our average take from that is about $80. All of that information is included in the 10-Q, but we’re taking about 40% of that. And we’re taking that for the provision of a suite of services to the physician. And that suite of services includes all the way from driving patients to the clinic, handling the pre-procedures, so getting them preauthorized and preapproved by the payer providing clinical training to the clinic, providing training to their reimbursement team at the back end and also supporting the patients themselves by providing co-pay support.
So the patients have the opportunity of not having any out-of-pocket cost for their procedure. So if you want to look at the patient as being the unit economic of the patient, that patient is going to go through eight to 20 procedures for treatment of psoriasis, and that would result in 8x to 20x $180 to the physician or 8x to 20x payment to us. In 2019, pre-pandemic, the company had 23,000 – approximately 23,000 new patient charts. So the company had in treatment within the partner network, approximately 23,000 individual patients. As we speak now and the charts will show when these go on the website, we are year-to-date at 10,000. The difference between 23,000 and 10,000 comes from two sources. One, the reduction in the number of patients that were put into treatment by the DTC process.
So in 2019, it was 6,000. And the other is the reduction in – regardless of direct-to-consumer, the reduction in the individual unit economics and the individual clinic economics utilization of the devices. And that is driven by the focus of the company being more towards clinical promotion and direct-to-provider promotion. So speaking about the clinical benefits of the procedure and less using the tools that were in place of promoting the front half or the front end of the office, driving patients to the office, the back end of the office, helping them through the reimbursement process and helping them through getting paid – helping the office is getting paid and helping the patients with their co-pay. These value-add services, which have been there for years have proved to be very successful in driving the business from a standstill, and I’m using 2018 as a standstill, and I’m using 2021 as a standstill because there was no DTC prior to 2018 for a few years, and there was no prior to 2021 because of COVID-19, driving it within the following fiscal year to be very productive.
So we’ve seen that for every patient that we’ve set up with an appointment in a clinic, we actually had a halo effect. So the multiplier was 2.1. We sent one patient to the clinic and 2.1 new charts showed up. Why? Because patients were speaking among themselves and because people were seeing the advertisement and not calling us but calling the clinic directly or also because the clinic was more – on average was more enthusiastic at driving the patients for the procedure. So if you look at the difference between 2018 and in 2019, the gross margins were pushed up by more than 15% only because that revenue comes with an incremental contribution margin of in excess of 90%. Now I’ll compare that to TheraClearX as per your request. So TheraClearX, the Medicare reimbursement rate for the CPT reimbursement code that represents what TheraClearX does, which is the treatment of an acne lesion through suction and removal of whatever is inside the lesion and the code number is 10040.
But the average Medicare national reimbursement for that is $118. What we have seen among partner clinics that already use the TheraClearX is that they treat the patient, they build that code, but they also build an office visit code that ranges between $50 and $70 per visit. So the unit economic for the office is anywhere between $170 to $190 per visit. The patients need six to eight visits to get fully cleared. And so you can do the multiplier for the office, you can do the multiplier for the patient. However, the big difference for the patient is that instead of paying in a cash pay approach, instead of paying $200 to $250 per visit, what they’re only responsible for is either their co-pay or if we fully deploy that we’re going to even take care of parts of that – of the co-pay.
And so that makes a huge change for the patient where the physician has less of a convincing job to do because he does not have to push the patients towards a cash pay procedure, but rather treat them in the clinic. Now as a reminder, acne is the number one condition that clinical dermatologists are treating. So there’s no shortage of patients. So that’s about the unit economic. The company has chosen historically to place these devices with a monthly minimum charge and a per-procedure charge that was much lower. That resulted in some of the clinics taking advantage of the first few months and trying to see if it works. And when it didn’t work, they pulled back. And what – the clinics that were productive were the clinics that were actually doing what I have described, which is a reimbursable procedure.
