DESIGNING THE DAY FINDING THE RIGHT SIZE FOR YOUR PACE PROGRAM … · Designing the Day: Finding...

Designing the Day: Finding the Right Size for Your PACE Program

National PACE Association Annual ConferenceOctober 20, 2015

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DESIGNING THE DAY • FINDING THE RIGHT SIZE FOR YOUR PACE PROGRAMAnne Lewis, MA, Vice President, Strategy and Growth, Trinity Health PACERichard Carroll, AIA LEED AP, Principal, McAuliffe + Carroll ArchitectsLori Aronson, MBA, Manager, Consulting Services, Health Dimensions Group

October 20, 2015 2015 National PACE Association Annual Conference

#NPA2015AC

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Site SelectionSite Selection

TimingTiming

FundingFunding

Development OptionsDevelopment Options

DesignDesign

PACE Center Development—More Art than Science

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Recognize the role building design plays in the care of participants in a PACE/LIFE community center

Identify the significant issues and potential roadblocks in creating a PACE/LIFE community center

Develop an understanding of how the PACE/LIFE community center can enhance operations and participant experience

Three Learning Objectives4



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Lori Aronson, Health Dimensions Group

Planning for Development of the PACE Community Center

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Laying the Foundation

Key Components of PACE Market and Financial Feasibility Study

Focus on the Pro Forma Financial Analysis

Complete Business Plan Development

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Feasibility Study Components7

Market and Demand Analysis

Organizational Assessment

Community Needs and Relationships

Assessment

Financial Pro Forma Analysis

Feasibility Study

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Market and Demand Analysis

Your Census

Determine Service AreaDetermine

Service Area

Assess Demographics

Assess Demographics

IdentifyReferral Sources, Partners

IdentifyReferral Sources, Partners Identify and

Understand Competitors

Identify and Understand Competitors

Project Total Enrollment

Project Total Enrollment

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Determine Service Area

Considerations include:

Is the service area you desireavailable?

Where do you have a community presence for serving seniors?

Are there sufficient numbers of eligibles?

What is the right size of the service area based on demand?

What geographical or logistical obstacles exist?

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Factors Used to Calculate PACE Demand

Participant age

Disability status

Financial status

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Medicaid Clinical Eligibility

Clinical eligibility varies by state,e.g., Iowa 1 ADL and Virginia 5 ADLs

Analyze only non-institutionalized population meeting Medicaid clinical eligibility

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Census and Survey Data:Medicaid Clinical Eligibility

Medicaid clinical eligibility cannot be captured specifically with available census data

Proxies for clinical eligibility from survey data:

Self-care disability—most conservative proxy, results in fewer persons eligible for PACE

2+ Any disability—least conservative, results in the most persons eligible for PACE

For most analyses, self-care disability used to reflect most conservative assumptions of PACE eligibility

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Clinical Eligibility in Philadelphia County, Pennsylvania

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Self-care disability results in fewest seniors meeting clinical eligibility, but applying 2+ any proxy to same senior population results in far more eligibles

Individuals Age 55+

= 377,947

Self-Care = 14,536

Mid-Point = 23,962

2+ Any = 33,388

Source: HDG analysis

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Medicaid Financial Eligibility

Medicaid financial eligibility varies by state from as little as $9,900 to as high as $26,388

Some states allow for spend-down, such as Kansas andNew York

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Distribution of Participant Payer Source15

0.9%

9.3%

89.5%

0.3%

Medicare Only Medicaid Only Dual Eligible Other

Most PACE enrollees are eligible for Medicaid, but analysis should also consider other payer sources, e.g., private pay

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PACE Demand by ZIP Code

ZIP code level analysis will help identify areas with the most opportunity

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ZIP Code - City

Financially and Clinically Eligible

with Self-Care Disability



With 2+ Any Disability

Conservative Mid-Point Aggressive

19106 – Philadelphia 70 115 159

19118 – Philadelphia 78 126 173

19124 – Philadelphia 422 711 998

19145 – Philadelphia 532 877 1,220

19153 – Philadelphia 92 154 213

Example only shows five ZIP codes from Philadelphia County



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Determining Service Area andCenter Location

Eligible population density drives service area and site selection decisions

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Determining Service Area andCenter Location (continued)

Consider travel routes and natural boundaries that may impact drive time and ease of accessibility

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Definition of Penetration Rate

Penetration rate: Percent of eligible persons that a program enrolls; also referred to as capture rate

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100 (Census)1,000 (Eligibles)

= 10% (Penetration)

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Market and Demand Analysis: Factors Influencing Penetration Rates

Reputation of sponsor

Existing dual eligible population served by sponsor

Support of referral sources

Distance and drive time

Competition

Age of program

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Penetration Rate



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Total Potential PACE Demand

2015 2020

Overall PACE Eligibles 3,405 3,726

7.5% Penetration 255 279




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Community Needs and Relationship Assessment

Understand competitors • Traditional competitors such as SNFs and ADHCs• Other competitors such as dual eligible demonstration plans and managed long-term care plans

Understand collaborators • Low-income senior housing• Senior housing• Area Agencies on Aging

Turn competitors into collaborators• SNFs• Managed care plans of all varieties

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Importance of the PACE Pro Forma

Often a deciding factor in executive management decision on whether or not to proceed with PACE

Determines estimated capital requirement and projected financial performance

Key part of business plan

Establishes budget and usedfor performance measurement

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Financial Performance Critical Factors

Access to capital

Start-up period

duration and cost

Enrollment

Capitation rates

Clinical management

and cost structure

Quality outcomes

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Access to Capital: Overview

Capital needs are measured during feasibility study

Pro forma estimates the following capital needs:

PACE center building

PACE center equipment

Vans

IT hardware/software

Start-up expenses

Initial operating losses

Risk reserve

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Access to Capital: Risk Reserve

CMS required solvency protection for PACE program

Required to have enough cash to cover one month of capitation revenue PLUS one month of purchased service expenses

Increases as enrollment grows

Can be met by:

Cash on hand

Line of credit

Surety bond

Sponsoring organization assets

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Access to Capital: Benchmarks

Component Expense

Adult Day Center Build = $3 million to $15 million

Purchase = $1 million to $3 million

Lease = $500,000 to $2.5 million

Equipment $300,000 to $700,000

Vans $40,000 to $60,000 each

Start-up Costs $500,000 to $1 million

Operating Loss/Reserves $1 million to $3 million

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Access to Capital: Summary

Capital requirement is extremely variable

Typically ranges from $3 million–$6 million

Payback usually occurs in 48–72 months

Financed through:

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Long-term debt Line of credit

Sponsoring organization loan, equity

transfer

Donations, grants



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Start-up Period

Program director

Administrative assistant

Marketing/intake staff

Medical director/NP

Center manager

Core interdisciplinary team

HR/Employee benefits

Consulting/TAC (provider application & PACE development assistance)

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12 to 18 months prior to opening PACE center

Costs typically range from $500K to $1 million and include:

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Enrollment Growth

One of the most important factors in PACE financial feasibility:

Drives the number and size of PACE centers

Key factor in determining break-even point and capital needs

Faster growth = quicker break-even

Slower growth = greater working capital need

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New Enrollees

Deaths and

Disenrolls

Net Monthly

Enrollment Growth



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Capitation Rate Estimates

Financial analysis requires reasonable estimates for:

Medicare risk adjustment

Medicare Part D payment rate

Medicare PACE-specific county rate annual inflation factors

Medicaid rates and annual inflation factors

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It is better to err on the conservative side than to establish unreasonable revenue expectations

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Capitation Rate Example

Medicare Part A and B Rate $2,791

Medicare Part D (estimated) $ 785

Medicaid $3,644

Total Dual Eligible Cap Rate $7,220

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Estimated dual eligible rate for Philadelphia in 2015

Medicare capitation estimated based on an average HCC risk score of 2.393 plus an average frailty factor of 0.149 adjusted for long-term institutional mix

Medicaid rate based on current actual rate in Philadelphia



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Estimate expenses using combination of data:industry, organization-specific, and local market

Expenses include:

Staffing (salaries and benefits)

Purchased services (including contract labor)

Insurance

Depreciation and interest

Rent and utilities

Management fee/ corporate overhead

Other non-salary expenses

Projecting Costs33

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PACE Median Per Member Per Month Costs

Expense Category PMPM Cost % of CostAdministrative & General $872 16%PACE Center $803 15%Home Care $661 12%Hospital Services $608 11%Nursing Home/Housing $579 11%Pharmacy $570 11%Transportation $303 6%Specialist/Diagnostics $298 6%Facility $174 3%Therapy $169 3%Social Services $113 2%Meals $112 2%DME/Supplies $95 2%

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Analysis of Pro Forma Results

Analyze key statistics to determine feasibility:

Break-even month

Internal rate of return

Operating margins

EBIDA margins

Capital requirement

Be aware of the financial risks(sensitivity analyses)

Decide whether PACE works financially for your organization

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Business Plan Development Components36

Business Description

Market Assessment & Marketing

Plan

Program & Management

Plan

Operating Plan Start-up Plan

Risk Assessment

& Exit Strategy

Financial Plan



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Business Description

Organization’s commitment to programs for seniors, duals, and population-based health

Vision for PACE development and expansion

Understand PACE business model in your system/continuum

What are the strengths and limitations of the model?

How does PACE fit into your system/continuum?

How will your system help you to access referrals?

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Identify and capitalize on how your organization can become a successful PACE sponsor

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Marketing Plan

Understand demand for PACE

Consider various growth scenarios

Market PACE

Traditional competitors

New managed care plans

How to access referrals

Internal referral sources

External referral sources

Develop strategic partnerships

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Create aggressive marketing plan with metrics for monitoring success and making corrections as needed



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Program and Management Plan

Describe the sponsor organization

Describe PACE management within the organizational structure

Identify key members of the management team:

Program director

Medical director

Other key members of the management team (if known)

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Support for PACE by organization leadership is critical to successful PACE start-up and expansion

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Operating Plan

Describe service area and development phases (if used)

Describe actual or potential site(s) for PACE center(s)

Identify opportunities for future expansion or use of alternative care settings (ASC)

Determine if care delivery waivers will be utilized

Identify internal services and resources you can draw upon, e.g., skilled nursing facility care, home care

Identify services directly provided versus contracted

Describe how health plan management functions will be performed

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Consider how to operate PACE with maximum operational efficiency, flexibility, and growth potential



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Start-Up Plan

Develop detailed timeline of start-up tasks, identification of key milestones, and assignments:

Site selection and construction/renovation schedule

PACE provider application; Part D application development

Start-up staffing plan description (in financial pro forma)

Provider network development

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2016 2017Phase Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Activity 1Activity 2Activity 3Activity 4Activity 5Activity 6Activity 7Activity 8

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Start-Up Plan (continued)

Identify state licensing requirements (e.g., HMO licensure, ADHC licensure, outpatient clinic licensure)

Consider how to meet health plan functions for new start-up:

Electronic medical records

Health plan management functions

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Create detailed description of PACE start-up activitiesand associated timelines



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Risk Assessment

Describe critical areas of riskand strategies for managing risk:

Census risk

Utilization risk

Medicaid revenue risk

Medicare revenue risk

Risk associated with changing state policies

Risk associated with changing federal policies

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Exit Strategy

Describe the circumstances under which the PACE program will be terminated:

Break-even not achieved within specified time frame

Census goals not achieved within specified time frame

Other reasons

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Identify program goals and exit strategy if program expectations are not achieved



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Rich Carroll, McAuliffe + Carroll Architects

Finding the Right Size for Your PACE Community Center

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Pro forma and demand analysis are your best friends

Growth projections should be the driver of almost all of the decision making related to the site and facility

You really should have a minimum of five-year look-ahead

Staff growth is an important as enrollment growth—Don’t forget they are related!

Know where your participants are; make sure they want to come to where you are or think you want to be

It Starts with the Business Plan!46



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Finding that Perfect Location

How many of your potential enrollees can you serve from here?

Can you get them to your front door in time?

When you grow, will the location allow you to age in place?

What amenities are there for your participants and staff?Adequate parking?

Access to mass transit?

Outdoor spaces like terraces or gardens?

Access to local amenities like parks or shops?

How much work does the site need and can you afford it?Time is as important as cost

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Image Placeholder

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How many people can we fit in here?

The 85/45 rule

Provide minimum of 85 square feet per participant for participant areas

Try to not exceed 45 sf per participant for non-participant spaces

What about the building code?

Now that we have them here, how much of _______ do we need?

Storage

8 sf per participant based on total census; shoot for 10% of total area

Personal care

Staff needs

Make a strategic decision about the user experience!

Now That You Have The Perfect Site, How About The Building?

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Provide safe and secure environment

Foster familiarity and comfort

Provide varying levels of privacy and social interaction

Support functional independence

Provide settings to support services

Facilitate orientation and way-finding

Provide abundant access to the exterior environment

Support spirituality

Provide delightful experiences

If These Are Things You Care About,Go for Quality!

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Focuses on people and the making of place

Enhances the user experience and contributes to their

well-being

Involves critical assessment of the care providers’ programs,

making sure the vital link between the participant and the

design of the facility is understood, refined, and strengthened

What is Restorative Place-Making?54



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When should you start planning for this?

How crowded is too crowded?

What are my options? Internal consolidation

Internal reconfiguration

Expand at current location

Relocate to new location

Maintain current center and open a second center

Consider alternative care setting (ACS)

Grow or Go?56



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Anne Lewis, Trinity Health PACE

Trinity Health PACE57

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32 states with operating PACE programs—Trinity Health operates 11 PACE organizations in 8 states

Source: NPA, August 2015

Trinity Health Is Largest Sponsor of PACE58



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Program State City Date Opened June 2015 Census

Catholic Health LIFE New York Buffalo 1-Nov-09 199

Eddy SeniorCare New York Schenectady 1-Oct-96 171

LIFE at Lourdes New Jersey Camden 1-May-09 223

LifeCircles Michigan Muskegon 1-Feb-09 225

LIFE St. Francis New Jersey Trenton 1-Apr-09 318

LIFE St. Joseph of the Pines North Carolina Fayetteville 1-Apr-11 232

LIFE St. Mary Pennsylvania Langhorne 1-Mar-10 229

Mercy LIFE (AL) Alabama Mobile 1-Jan-12 174

Mercy LIFE (MA) Massachusetts Springfield 1-Mar-14 93

Mercy LIFE (PA) Pennsylvania Philadelphia 1-Oct-98 659

Saint Francis LIFE Delaware Wilmington 1-Feb-13 142 2,665

Trinity Health PACE Plans Overview

Nine wholly owned

Two joint ventures: Catholic Health LIFE; LifeCircles

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Trinity Health PACE Plans60



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The Growth Imperative: Big Challenges

Increasing Expense

Eroding Revenue

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Consistent growth is the key to financial viability

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LIFE at Lourdes (New Jersey)

New center in Burlington County, NJ

LIFE St. Francis (New Jersey)

Replacement center in Bordentown, NJ

New center in Middlesex County, NJ

Mercy LIFE (Pennsylvania)

If awarded, new center in Montgomery County, PA

Eddy Senior Care (New York)

Replacement center in Schenectady, NY

St. Francis LIFE (Delaware)

New center in Newcastle County, DE

Planned Expansion Projects62



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Center projected to open in mid-2016

New Program Development: Saint Joseph63

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Center projected to open in 2017

New Program Development:LIFE St. Michael, Newark, NJ

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Created in February 2015

Focus areas:

Development

Support program and site expansion

Identify best practices and implement them across the system

Create standards and reduce variations

Develop shared services to support plan operations

Trinity Health PACE—A National Health Ministry

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Trinity Health PACE—National Health Ministry Leadership

Kelly Hopkins, President

Carrie M. Hays Mcelroy, Vice President of Clinical Operations

Anne Lewis, Vice President of Strategy and Growth

Emy Creaney, Certified Medical Coding Manager

Jennifer Cyr, Accountant

Consuerella Edwards, Claims Manager

Tara Woodruff, Claims Analyst

Jillian Momon, Executive Assistant

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Goal: Centralize plan functions at a national or regional level to increase efficiency and lower costs

Claims Adjudication and Claims Management ServicesGo live: October 1, 2015

Target: All programs on-line within 16 months

Projected Cost Savings: $3.2 million through FY 2020 with annual ongoing savings of $1 million

Shared Services67

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Negotiated master services agreement with a national commercial real estate services firm

Purpose: Increase consistency in Trinity Health center development process across programs and reduce development costs; as part of this, CBRE negotiates all leases on our behalfTask I: PACE Business Plan Development

Support business plan development for efficient and “speed to market-driven” PACE centers using best practices and established protocols. Assist with strategic, real estate, capital and facility planning/management

Task II: PACE Site Identification Identify site that meets criteria from Task I and negotiates lease

Task III: Owners Representation Services Deliver efficient and “speed to market-driven” PACE centers utilizing best practices and

established protocols within strict budget and schedule guidelines

Shared Services: Site Development68



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Expands existing PACE center enrollment capacity; participants served in ACS require fewer attendance days in the center

Eliminates or significantly reduces capital expense

Increases ability to react quickly to new market opportunities

Allows for incremental growth with conversion to a PACE center at a later date

Repurpose obsolete PACE center

Respond to participant desires

Cost-Effective Growth Strategy: Alternative Care Settings

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Grow by reaching further into existing approved service area

Seed enrollment in preparation of newPACE center development in new location

Respond to unique market challenges:

Distance

Cultural

Geographic barriers

Respond to consumer preferences, e.g., capitalize on relationships with existing service providers

ACSs used in conjunction with other regulatory flexibilities, e.g., Community-Based PCPs; results in greater benefit to PO

PACE Center

CBPCPsAlternative

Care Settings

ACS Strategy Examples70



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LIFE St. Francis71

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LIFE St. Francis (continued)

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LIFE St FrancisPACE CENTER



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LIFE St FrancisPACE CENTER

ACS CENTER


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PACE CENTER

ACS CENTER




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Questions and Answers75

Wrap-up76



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Anne Lewis – (406) 669-3332 or [email protected]

Lori Aronson – (513) 284-9091 or [email protected]

Richard Carroll – (609) 397-0095 or [email protected]

Contact Information77

DESIGNING THE DAY FINDING THE RIGHT SIZE FOR YOUR PACE PROGRAM … · Designing the Day: Finding...

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