Transcript First Year Operations, Lessons Learned from a Hard

Senior Living Consultants
First Year Operations:
Lessons Learned from a Hard First Year
www.npaonline.org
PACE Model
 Five Service Elements
• Intensive primary care
• Integrated Team management
• Use of adult day health center
• Home care
• Transportation
PACE Model
 Required “Best Practices”
• Voluntary caregiver support
• End-of-life care
• Management of participant/family
member noncompliance
The Consultant Role
 Assist new PACE organizations to reach
program goals:
 Provide quality of care
 Manage operational costs
 Reach census goals
 Facilitate medical cost management and
expense containment while capturing
appropriate revenue
HE SAID WHAT??
Consultant-Client Communication
 The course of action is correct…but
consultant failed to do a good job
communicating with the client—the client is
dissatisfied and the consultant is blamed
 The difference between clarity and
confusion—we are speaking two different
languages..EDUCATING, LISTENING,
PLANNING
Consultant-Client Communication
 Establish a set of objectives that both the
client and the consultant understand:
• Understand the strategic mission
• Develop a well-defined work plan with assigned
deadlines and responsibilities
• Formulate an action plan that will help the team
achieve a successful opening and fill-up
Consultant-Client Communication
 Consultant should remember to:
• Focus on client goals
• Use industry specific language or just plain
English will do..Thank You Very Much!
• Provide repetitive follow-up
• Establish reasonable feedback/communication
timelines from the very beginning
• Relationships take time..give client examples of
results when they are apprehensive about a
strategy or idea
Consultant-Client Communication
 Client has responsibility, with consultant
support, to:
• thoroughly learn the PACE “language”
• understand deadlines for submission of data
• Understand HCC method of reimbursement
 Consultant should provide to the client
simplified definitions and topics to further
study
Consultant-Client Communication
 Mind Shift
• The provider brings to PACE their unique
perspective from their own fee-for-service
world
− Health System: the Step Child—load them up with
overhead and don’t give them any capital
− Hospice—we already know how to do this!
− CCRC—what does a poor, old, frail person look like?
Consultant-Client Communication
 Time/Census/Operating Loss PRESSURE
COOKER
• Sponsors/providers expect
- shorter development periods
- quicker fill-ups
- lower start-up losses
Lessons Learned
 Extra Doses of:
• Training
• Pre-Marketing (Okay…Public Relations)
• Contingency planning and cash
• Excited stakeholders
PAY BIG DIVIDENDS!
Lessons Learned
 Fast census growth provides the cushion to
learn the model
 IDT function can be messy but is not easily
learned from the sidelines
 The State Administering Agency is always
moving the cheese
• lowering rate
• imposing census caps
Lessons Learned
 You will want access to affordable housing sooner
than you think
 You have to be prepared to expand well before you
are at full census
 The most common Team member you will have to
change may be your primary care physician
 Team members must adopt the PACE model
without reservation. Rehab staff may have difficulty
letting go of the Medicare regulations pertaining to
Skilled Nursing, affecting IDT.
…The Rest of Story
 Question? How can the same organization
have two programs at different ends of the
spectrum,
• one of the most financially successful programs, and
• the worst PACE start-up?
 Answer:
• Totally different markets
• Organization was a dominant brand in the first
market
…The Rest of Story
 Question? How did a program identify 75
participants (prior to program approval) who
mostly enrolled in the first few months of
operation without marketing directly to the
family or participant?
 Answer: Great pre-marketing and referral
sources
…The Rest of Story
 Question? How did a PACE lose millions
in just 6 months?
 Answer: not paying attention to Medicare
Risk Scores
PACE and the Numbers
Page 19
Participant Net Growth
 Competition—real or perceived
 Marketing—reaching potential
participants
 Gatekeepers—Division of Aging, AAA
 Financial Eligibility—100% to 300%
of poverty level
Participant Net Growth
 Greater initial enrollment (accelerate
break even)
 Staffing for growth (assessment and
timely additions of staff)
 Timely expansion of adult day health
center capacity
The Numbers
Statistic Experience Minimum
Net
Growth
1 to 14 per
month
3
Impact
Five-year impact of achieving
5 instead of 3
Doubling of cash and
operating income
Initial
Census
1 to 20
participants
5
First year impact of opening
with 20 instead of 8
Breakeven occurs 4
months earlier and
operating losses drops by
$500,000
Medicare Payment
 Based on diagnosis plus frailty factor
 Medicare risk scores ranged from 1.73 to 3.07
based on January 2012 PDAC data
 Average risk score=2.35
 The % change $PMPM from interim January 2012
payment to 2012 Final Payment showed individual
programs experiencing reimbursement changes
from -19.11% reduction to +35.22% increase due
to risk and frailty scores.
Capital Costs
Component
Expense
Adult Day Center
Build
Purchase
Lease
Capital Improvements
$4M to $15M*
$1M to $3M*
$3 to $30 per SF/year*
$900K to $2.3M ($60-$150/SF)*
Vans
$45 to $50K each
Start-up Costs
$500K to $1M
Operating Losses
$500K to $4M
Cash Reserves
$500K
*Range due to relationship between building condition and capital requirements
Operating Factors/Practices
 Participants living alone—5 to 40%
(dramatically affects costs)
 Prevalence of specific chronic
diseases



ESRD
COPD
Behavioral
Operating Factors/Practices




Primary care effectiveness
Team Performance
Day center attendance
Day center expansion—mitosis or
start from scratch
Operating Factors/Practices
 Review all hospital discharges and
readmits within 30 days
 IDT decisions provide medically
necessary services to members. With
PACE flexibility, value and quality of care
co-exist in preventive care
Contractual Services
 Hospital—rates and utilization significantly
affect financial performance
 Nursing Home—utilization
 Assisted Living
 Home health/home care-utilization
 Specialists – automatically scheduling follow
up visits…A PACE physician decision.
Financial Performance
Total Capital Investment
$1M to $5M
Operating Margin
5% to 15%
Break Even
6 to 18 months
Program
Revenue intensive for
minimal investment
Contact Us
1501 Greer Lane
Signal Mountain, TN 37377
423.517.0567 ▪ 423.517.0568 Fax
[email protected]
www.consulting-cds.com
www.npaonline.org