Understanding the business side of PACE, part 1: the National PACE Association develops new financial planning tools for would-be developers - Feature Article - Programs of All-inclusive Care for the Elderly is known for high-quality clinical outcomes of its enrollees

Nursing Homes, April, 2003 by Jade Gong, Robert Greenwood

2. Next, the provider can review the business-planning checklist, which will identify all of the information that should be analyzed to develop a complete business plan that could be presented to board-level decision makers and/or external sources of financing.

3. With this road map in mind, the provider can now review the baseline scenario, which presents a reasonable case for the start-up of a new PACE program.

4. Finally, the provider can use the PACE Financial Proforma and work with a PACE TAC to develop a customized financial proforma for its own PACE site.

Using the financial proforma model, sensitivity analysis can be undertaken on key assumptions that drive financial performance, such as the Medicare and Medicaid capitation rates, enrollment growth, and rate of nursing home admissions.

It is critical to understand that this financial model provides a "first cut" review on the feasibility of starting up a PACE program. Full financial and market-feasibility studies should be undertaken to determine the viability of a PACE model in a given market.

Conclusion

Even in these financially uncertain times, many provider organizations are looking at PACE as a key program to position themselves for the future. The new Financial Planning Tools developed by NPA take much of the mystery out of developing a new PACE program and will lead organizations through a process of carefully preparing the launch--an advantage previous PACE sponsors have not had.

RELATED ARTICLE: The Tool Kit

The complete set of Financial Planning Toots includes the following:

* Business Planning Checklist

* Case Study: Total Longterm Care, Denver, Colorado

* Case Study: Alexian Brothers, Community Service, Chattanooga, Tennessee

* PACE Financial Proforma Baseline Scenario

* PACE Financial Proforma and User's Guide

PACE: The Basics

Programs of All-inclusive Care for the Elderly, or PACE, serve individuals with long-term care needs by providing access to the entire continuum of healthcare services, including preventive, primary, acute, and long-term care. If a PACE enrollee needs nursing home or hospital care, the program continues to not only coordinate his/her care, but also to pay for it.

The PACE model provides a great deal of flexibility for both the provider and the elder enrollee. PACE programs are paid a flat, capitated payment for their all inclusive services. This model ensures that providers' financial incentives and enrollees' quality-of-life incentives are aligned. From a financial perspective, PACE providers' success relies upon the use of lower-cost preventive care to avoid higher-cost inpatient hospital or nursing home care as much as possible. To coordinate care as effectively as possible, PACE employs an interdisciplinary team to deliver and coordinate care across all settings--from the home to the hospital. A basic tenet of the PACE philosophy is that it is better for both the senior with long-term care needs and the healthcare system to focus on keeping the individual living as independently as possible in the community for as long as possible.