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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Financially and Clinically Eligible
Financially and Clinically Eligible
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
Total Potential PACE Demand
2015 2020
Overall PACE Eligibles 3,405 3,726
7.5% Penetration 255 279
10.0% Penetration 341 373
15.0% Penetration 511 559
20.0% Penetration 681 745
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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Rich Carroll, McAuliffe + Carroll Architects
Finding the Right Size for Your PACE Community Center
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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Anne Lewis, Trinity Health PACE
Trinity Health PACE57
#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
The Growth Imperative: Big Challenges
Increasing Expense
Eroding Revenue
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Consistent growth is the key to financial viability
#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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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Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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LIFE St. Francis71
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LIFE St. Francis (continued)
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LIFE St FrancisPACE CENTER
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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LIFE St FrancisPACE CENTER
ACS CENTER
LIFE St. Francis (continued)
#NPA2015AC
PACE CENTER
ACS CENTER
LIFE St. Francis (continued)
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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Questions and Answers75
Wrap-up76
Designing the Day: Finding the Right Size for Your PACE Program
National PACE Association Annual ConferenceOctober 20, 2015
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#NPA2015AC
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