copyright 2010 capital strategists llc june 2010

Copyright 2010 Capital Strategists LLC

June 2010

Success and

Sustainability

Kathryn R. Reed, MHA, CMPEExecutive Director

Catskill Hudson AHEC

Tom RalserPrincipal

Convergent Nonprofit Solutions


Why Listen to Me?

Our DNA is in over 450 funding efforts

All types of NPOS in 49 states

Investment Analyst, CFA, CMA

Techniques helped raise

over $850 million

Author of . . .


Our Philosophy


“If your organization doesn’t demonstrate its value to potential funders, they’ll fund an organization that does.”


A financially sustainable program that positions Catskill Hudson AHEC as an investable community asset


Today’s Discussion

1. HealthMatch, a turnkey solution to rural physician recruitment

2. A template for developing other sustainable programs


The HealthMatch Program

The ProblemNot unlike yours


Review of HealthMatch Program

• The Problem– Critical shortage of primary care

physicians across New York State

• Aging out of provider population

• Fewer medical students choosing primary care as a specialty

• Demonstrated difficulty recruiting physicians to rural, underserved areas of the State


Reality. . .

Hospitals are prevented from assuming the sole responsibility for physician recruitment


HealthMatch Program

Determined that regulatory mandates constrained hospitals from assuming the sole responsibility for physician recruitment

Established the concept of a collaborative recruitment program involving community key stakeholders

Developed a three-phased approach to community-specific health professional recruitment and retention


HealthMatch Program

Plan componentsCommitting to the Community

– Educating and engaging communities in the process of needs assessment and establishing incentive programs

Coming to the Community– Community involvement in recruitment of health

professionals – assuring the right “match”

Staying in the Community– Consultative services for practice development and

management


• Fall 2006: Began Feasibility work

• May 2007: Feasibility interviews

• July 2007: Results and

Recommendations

Timeline of Events


Background on Feasibility Process

• Prospectus presented a 3 part strategic initiative with a total regional funding goal of $1,485,000

• Interviews conducted with 37 community, political, and business leaders across 11 counties

• Interviews were conducted in an informal, conversational style


Key Findings of Feasibility Process

• 81% of interviewees had little to no knowledge of the CHAHEC and its services

• 90% of respondents answered that access to quality healthcare and retention of physicians in rural areas were extremely important and needed to be expanded and supported

• 46% of interviewees indicated that they would like to assume a personal leadership role in this effort


Key Findings of Feasibility Process

• 38% gave an indication of financial support

• 60% of respondents thought that the CHAHEC’s funding goal of $1.4 million could be raised

• 95% of those interviewed felt the program should move forward


Recommendations of Feasibility Process

A regional funding goal of $1.1 to $1.4 million is realistic

Funding levels can improve with early leadership

A strong effort must be made to inform and educate the public regarding the CHAHEC’s programs and services


Conclusion of Feasibility Process• People like idea and realize the need for

action

• CHAHEC is “obvious choice” to do this

• Process needs to be top-down and inside-out

• Effort should be launched as soon as possible to capitalize on the momentum generated


Then the Economy Changed

Shelf life of the feasibility process

Board buy-in

Eleven county area a bit large

Needed to regroup: the New Normal


Moving HealthMatch Forward


Grant Beginnings

HEAL NY grant was the catalyst


HEAL NY Grant Provides• Consultative services of

– Catskill Hudson AHEC – needs assessment, physician recruitment and practice management

– Capital Strategist Group – project funding and sustainability strategies

– Communication Services – branding, messaging and marketing community

• Physician database

• Physician recruitment marketing

HealthMatch


Grant BeginningsAlthough a great start, it was not the

complete solution

Still needed a sustainable source of funding for the long run

Primarily for incentive packages


• Educational Loan Grants– 10% a year

• New Practice Establishment– Revolving loans– Grants

• Existing Practice Support

Typical Incentive Programs


The Plan

Establish pilot program

Generate private sector investment to ensure long-term financial

sustainability


Pilot program• Why Ellenville?

– Community-based hospital

– Location - Location - Location

– Focus Group of Jan. 2007 catalyst

• Demonstration of viability of this approach to physician recruitment

• Provides foundation for replication across region

HealthMatch


Typical Costs of Recruitment

Recruitment Incentive Program• Average medical student loans $150,000 to $200,000• New practice establishment costs - $350,000• Practice Support for new provider - $100,000 over

first two years

Why Needed?


Community Promotion Costs:

Community promotional material & direct mailings

• Average costs - $25,000 Community website development

• Average costs - $15,000 - $20,000

Why Needed?


The Challenge:

Moving beyond the grant to private sector investment


We believe that nonprofit

and for-profit

organizations share the

same trait:

The Bottom Line


Deliver outcomes

that

investors value


Not unlike for-profit counterparts

Use words like bottom line, investors, and value

Logical conclusion is . . .


The The Investment-Driven Investment-Driven

ModelModel™


An alternative view (revolutionary to some, common sense to others) of nonprofit funding that focuses on delivering outcomes that investors value

The Investment-Driven Model™


The IDM . . .

Maximizes your strengths

Respects your capability

Focuses on

investable outcomes


Investment-Driven Model™ answers…

Why should I invest in your organization over some

other nonprofit?

What are you going to really accomplish?

How will my company benefit?


Not a theory . . .



The results speak for themselves



Small Projects Location Population Time $ Goal $ Raised

Vermillion SD 10,500 6 mos. $1.5 million $1.64 million Sheridan WY 17,200 8 mos. $1.4 million $1.42 million Jacksonville NC 68,000 6 mos. $ 900,000 $1.17 million Gowanda NY 2,600 6 mos. $ 500,000 $ 549,000 Thomasville NC 26,000 7 mos. $ 750,000 $1.03 million Burlington IA 35,000 8 mos. $1.5 million $1.51 million


Large Projects

Location Time $ Goal $ Raised

Seattle WA 12 mos. $13.5 million $15 million Orlando FL 10 mos. $17.5 million $18 million NE Indiana 12 mos. $6 million $7.5 million Paducah KY 11 mos. $5 million $5.2 million Dupage IL 12 mos. $5.5 million $5.5 million Toledo OH 12 mos. $8 million $9.2 million Indianapolis IN 11 mos. $15 million $15.2 million


Genesis of the Investment-Driven Model™

•Began with Funders

•Embraced by fundraisers

•Now an alternative and complimentary way to view nonprofit funding


Today’s Landscape

•The Investment-Driven Model

•3 Paradigm Shifts

•Lessons from For-Profits


NonProfit vs.

For ProfitModels


The grant-driven nonprofit model is a designed to be an unreliable, overly dependent,

financial downward spiral


How many did I offend with that comment?

Fill Need

Get FundingSee Need

Deplete Funding

Write Grant

NonProfit Model


The for-profit model is a designed to build capacity,

but only if value is delivered

Fill Need

Get FundingSee Need

Write Plan

For Profit Model

Generate Funding


The The Investment-Driven Investment-Driven

ModelModel™


1. How it works

2. Why it works

3. Why it will work for you


The Investment Driven Model

Focus on the value of outcomes

ROI is pivotal

Answer “What’s in it for me?”


1. Eliminating the gift mentality

2. Emphasis on results

3. Less reliance on

emotional

approach

3 Formative Shifts


Shift #1Eliminating

the Gift Mentality

Charity Investment

Gift vs. Investment

Gift Implications Investment Implications Nothing expected in return Something expected in return Small, not of major value Large, major value Social and cultural emphasis Business emphasis Better to give than receive A penny saved is a penny earned A hope that receiver will appreciate it The expectation it will perform


Taking Up a Collection

versus an

Investment Driven

Organization


Taking Up a Collection

• Emotional appeal

• No target amount

• Everybody is a prospect


In other words . . .


Shift #2Emphasis on Results


“What’s in it for me?”


Outputs

Outcomes

Value


Shift #3Less Reliance

on the Emotional Approach

Emotional Bottom Line

Outputs Outcomes

Anecdotal Examples

Descriptive Statistics

Stakeholder Surveys

Economic Impact

Organizational Impact/OVP

Specific/ Customized ROI

Warm / Fuzzy Appeals Only


Why It Will Work For YouWhy It Will Work For You

• Demonstrates all of today’s buzz words: transparency, accountability, credibility

• Distinguishes your NPO by delivering measurable outcomes with

value

• Proven funding results


Applying the IDM to HealthMatch


Getting to that

“What’s in it for

me?” level


BenefitsCommunity-based healthcare is greatly

improved and the need to travel outside the community for healthcare needs is greatly reduced.

Higher paying jobs become available - not just for healthcare providers, but for support staff as well.

This improves and supports the local economy.

HealthMatch


HealthMatch

BenefitsA healthier workforce is cultivated

because more people will have access to healthcare.

A renewed sense of commitment arises because people come together to improve the health of their community


Realized that the process for moving forward

in economic development is the same as it is for

healthcare


The HealthMatch / Economic Development

Connection


Economic Development Roots

Healthcare IS economic development

On decision list for site selection Can be a perk for attracting employees

Improves community “product”

Makes community more marketable


Combining Efforts

Jump starts more formal economic development efforts

Crosses healthcare off of short list

Process to capitalize is the same

Necessary leadership is the same

Economic Development Components

Community Marketing

Physician Recruitment

Branding Direct marketing Collateral material Web Site

Loan forgiveness Establishment costs Practice support

Recruitment Retention Opportunity fund Site marketing

Complete Economic Development Plan

Classic ED Roles


In a Nutshell

Pilot program must raise at least $200,000 in funds

In turn, HealthMatch will providePhysician recruitment

• Database, Mailings, Screening, Interviewing, Introductions, etc.

Community marketing

Foundation for broader economic development funding


• Always under control of the community

• Can be structured many ways

• Key is to be competitive and realistic

Remember, This Program Is:


Value Proposition Summary

Win/win for community

HealthMatch will do the heavy lifting in fundraising and marketing

Need partners and endorsements to make initial funding successful


Economic Development Impacts

Hospital is one of largest employers

Healthcare one of key economic drivers

Economic impact is substantial



Each job at the hospital creates .53 additional jobs

More than

• Accommodations• Foods services• Education



Each dollar paid in earnings by the hospital stimulates another $.42 in area earnings

More than • Professional services• Education• Misc. manufacturing



Every million dollars of service delivered by the hospital

creates an additional

$686,000

in business in the area


Almost FinishedRecognized need

Tested solution in communities

Formulated solution


Received positive feedback

Secured seed money


Secure community funding

Integrate HealthMatch into broader economic development plan

Launch !


Where We Stand Today

Incentive pool funds

Database

What we have learned


Q&A


Thank [email protected]

copyright 2010 capital strategists llc june 2010

Documents

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feasibility interviewsjuly

rural areas

feasibility workmay