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Provide quality services - Create efficiencies - Enhance agencies’ potential for growth & advancement
Foster treatment - Impact people & business practices - Maintain stability
Cultivate leadership
Alternative Approach to Mergers & Acquisitions
Affiliation Networks & Constellation Creation
Inperium, Inc.Ryan D. Smith, Founding President & CEO
Inperium, Inc.Jay Deppeler, M.Ed.Executive VP & Chief Operating Officer
The Human Services & Behavioral Health Sector
Community-Based Organizations (CBO)
Challenges FacedTactical Strategies
Challenges FacedServices delivered by CBO affect the lives of one in five Americans and account for nearly $200 BILLION in economic activity.
A recent report from the American Public Human Services Association disclosed significant funding challenges and risks.
There is limited opportunity for program growth as a mechanism to increase revenues & costs are rising at unsustainable rates.
Changes in payment rules and structure will increase the need for cash.
Services sectors are experiencing limited access to affordable executive talent.
The Missions of Organizations are becoming further unsupported.
Several strategies to put CBO on a path to financial stability included innovations, data sharing, technology & identifying deeper strategic partnerships such as mergers, acquisitions, affiliations, and networks.
The importance of autonomy & independence for the CBO will drive the decision in identifying the strategic partnership that is the best fit.
Tactical Strategies
Changeable TimesToday’s Landscape
Historical Systems Drivers Consequences
Choices
1. Organizations culture and Mission typically reflect the time in which they were created2. Organizations were designed to be safeguards between individuals & the Government3. Government established the rules4. Cooperation with the rules is demanded5. The rules have evolved & taken on different iterations demanding changes in approaches and thinking
Historical Systems Drivers
Consequences1. Organizations are no longer an extension of Government & therefore no longer guaranteed by Government2. Prior business models & approaches are proving ineffective3. The skills necessary to manage an Organization have changed4. Proficient process are required for sustainability5. The ability to grow & endure remains constricted6. No longer geographically constrained
1. Remain a stand-alone Organization2. Remain a stand-alone Organization & purchase select Administrative services from elsewhere3. Remain a stand-alone Organization & provide select Administrative services to others4. Engage in merger & acquisition activities as either the acquirer or target5. Explore joint ventures6. Consider an Affiliation
Choices
The Emerging Market An Overview
Industry TransformationDesired Outcomes
Calculated Considerations
1. Greater number of at-risk contracting agreements, evolving payment processes & services quality demands2. Changing technological requirements3. Turnover in Leadership & need for Leadership to understand “how to” lead in new & changing marketplace4. Limited capital access & undercapitalization5. Highly fragmented Provider Network
Industry Transformation
Desired Outcomes1. Attributes of independence & continuation of Mission, sustainability & advancement of services2. Capital transfer for operations & investment needs3. Retention of ALL staff4. Provide access to larger scale management, information systems and overall infrastructure5. Enter into new geographies & diversify business lines
1. Recognition that business combinations is a tactic (approach) not a strategy (plan)2. Establish Board & CEO approved business combination criteria – essential elements of the arrangement3. Determine the need/use of a Broker, Auditor or Attorney experienced in business combinations4. Use of outsource due diligence5. Process should target pace of implementation
Calculated Considerations
Objectives –The Explanation
TEN Themes Outlined
1. Identify the difference in form/structure between Mergers, Acquisitions (M&A) &Affiliations and the variations of Affiliations.
2. Understand how the Affiliation Network contrasts from other M&A & Affiliationmodels/approaches and assess the need for what business combination approachworks best for the Organization.
3. Categorize the short and long term benefits of Networks that create efficiencies & addressManaged Care methodologies.
4. Improve an appreciation for how fiscal and programmatic considerations merge togetherthroughout the process that results in expanded programming aligned with yourmission, services quality & cultivates leadership.
5. Distinguish how a business combination offers protection from the evolving challenges inhuman services sector funding related to stagnating reimbursement rates & increasedoperating expenses around staffing shortages & increasing health insurance costs.
Objectives & Themes Outlined
6. Realize in what manner stakeholder concerns are addressed throughout the Affiliation process through the use of Affiliation Collaboration Teams (ACT).
7. Enhance comprehension of the need for scope and scale of systems available throughNetworks that create value-based purchasing protections & learn about otherStates experience.
8. Recognize that through Affiliation the maintenance of local culture, autonomy andidentity are fostered ensuring organizational advancement while enhancingagencies potential for growth & advancement.
9. Know what impacts an Affiliation Network creates in order to promote organizationalsustainability on emerging reimbursement systems like Value Based Payments (VBP)& offers integrated care strategies.
10. Generate interest from your organization to better understand how Affiliation can workfor you and your specific needs impacting people & business practices.
Objectives & Themes Outlined (cont.)
Affiliation QuestionnaireObjective & Situational Elements Considered
A Self AssessmentA Path Forward
http://affiliationcalculator.com/
Affiliation Questionnaire – Should I Learn More?
Experiencing difficulty addressing quality, promoting strategic growth or fundraising revenue is <3% of total revenues. *
Revenue has increased less than 3% from the prior period or revenues are increasing and margin is decreasing.
Expenses outpaced revenue, unrestricted assets declined or revenues are more than 6 times net assets. *
Margin was less than 3% of revenue or margin percentage is declining from prior period.
Accessed reserve fund sources to support expenses/debt or have less than 90 days unrestricted cash or cash availability. *
Administrative costs were more than 8% of total expenses or there is an imminent change at Leadership level. *
Employee benefits/insurance costs increased >5% from prior period or staffing vacancies/turnover rates increased.
Worker’s Compensation experience modification rate is greater than 1.0 or overtime hours paid exceeds 5%.
Unfavorable credit terms, loan to value (LTV) position, violated debt service covenants or liquidity ratio is under 1.25. *
IT systems/software/infrastructure is needed/in need of updates/upgrades.
Inperium rule of thumb - if 6 or more of the above statements applies or if 1 of the * statements is applicable to the Organization – Affiliation is a sustainable option.
How many of these STATEMENTS are accurate for the Organization?
Accounts Receivable days of service outstanding (DSO) is >55 days or the % of funding reliance from largest funder is >50%.
Total Liabilities to Net Assets is <1.0, Line of Credit (LOC) as % of Current Assets is >10% or total Revenue as % of Assets is <1.0.*
Inperium, Inc.Affiliation Questionnaire – Should I Learn More?
Worksheet - 20 Elements Analyzed
Prior Period
Audit Revenue
$
Affiliation Worksheet – Tell Me to Learn More?20 Basic Data Elements - Tell 20 Answers - May Provide A Path Forward
① ≤ Revenue② Revenues ↑ & Margin ↓③ Revenue Is Outpaced④ Assets ↓⑤ Revenues ↑ 6x Net Assets
⑥ ↓ 3% Margin⑦ ↓ Margin %⑧ Accessed Reserve Funds
⑨ ≤90 Days Unrestricted $ Available⑩ Administrative ≥8%⑪ Benefits/Insurance costs ↑
⑫ WC Mod Rate ↑1.0⑬ OT ≥5%⑭ Liquidity Ratio ≤1.25
PRIOR PERIOD Prior Period
Audit Expenses
$
Prior Period
Unrestricted Net Assets
$
Prior Period
Audited Fund Balance
$
Prior Period Costs
ALL Employee Benefits
$
Current Period
Revenue Annualization
$
Current Period
Expenses Annualization
$
Current Period
Unrestricted Net Assets
$
Current Period
Fund Balance Available
$
Current Period Costs
ALL Employee Benefits
$
Current Period
Assets Balance Sheet
$
Current Period
Liabilities Balance Sheet
$
Current Cash
on Hand
$
Period
Administration %
%
Worker's Compensation
Modification Rate
1.0
Total Straight Hours
Paid
0.00
Total OT
Hours Paid
0.00
CURRENT PERIOD
Full Interactional Worksheet Application can be accessed from Inperium’s Web Site – www.inperium.org
AR - Days of Service
Outstanding
0
% of Funding
from Largest Funder
0%
Current Line of Credit
Balance
$ -
⑮ DSO >55
⑯ Largest Funder >50%
⑰ Liabilities to Assets is <1.0
⑱ LOC % of total assets is >10%
⑲ Revenue % of Assets is <1.0
⑳ Fundraising Revenue <3%
Outcomes –The Explanation
Benefits Outlined
The Outcomes & Benefits Outlined with Inperium
AFFILIATION EMBRACES:✓ Allows for the affiliate to maintain its Mission, Vision, Staff & Board✓ Expands & strengthen quality services creating new opportunities✓ Aids and disseminates innovation & resources across its partners✓ Facilitates the accumulation of capital for reinvestment in staff/technology✓ Significantly lowers costs for back office supporting services, i.e. Fiscal & HR✓Offers Expanded geographies in which to operate✓ Dramatically reduces administrative expenses due to scale economies✓ Advances revenues & net assets✓Offers access to larger lines of credit & cash for operational needs✓ Practices a flexible approach✓ Uses a customizable platform based on the unique circumstances that exist✓ Practices our GLOBAL LOCAL attitude
BENEFITS INCLUDE:
The Outcomes & Benefits Outlined with Inperium (cont.)
• Strengthening of the mission & programmatic operations of the Organization • Ability to further the Organization’s mission and vision & reinvest back into the Organization• Enhance affiliate quality & reduce distractions that allow for a greater focus on quality• Expansion & enhancements of current service lines, new service lines & new geographies • Professional advancement opportunities & staffing vacancies• The ability to work within other human service entities, service lines & States• The ability to progress within the constellation both vertically and horizontally• Cost savings and reduction of expenses through leveraged scale buying• Reduction of costs through providing the back office services • Sharing of administrative costs with other affiliates so no one entity bears the full burden• Offers access to banking/financial relationships • Provides & advances the ability to refinance existing debt under more favorable terms• Balance Sheet asset adjustment to Fair Market Value under GAAP accounting
Definitions DescribedMerger – Acquisitions – Affiliation
Varied Models of Affiliation
Definition of Acquisition
Acquisition refers to the purchase of a business target byacquiring enterprise so that the acquirer gains control over thetarget by purchase of the assets of the company or byobtaining ownership over 51% of its capital without the two (2)companies losing their existence. The acquirer is morepowerful in terms of size, structure, and operations, whichtakes over the weaker company & is done either voluntarily orinvoluntarily.
Definition of Affiliation
An affiliation involves two (2) companies that are working towards similar goals orproviding equivalent services that become connected which results in theadoption of a common sole member resulting in both companies benefiting fromeach other under the common membership achieving scale economies & othersynergies while maintaining their own legal existence, culture & Mission.
Definitions: Merger – Acquisition - Affiliation
Definition of Merger
Merger refers to the consolidation of two or moreentities to form a new company with a new name as asingle entity in which there is shared ownership &control while having all the assets/liabilities/legalrights/obligations of each company combined. Theconsolidating companies no longer exist. The two (2)companies amalgamate & are dissolved to form a newcompany.
Contractual RelationshipOrganizations remain independent, agree to a collaborative effort (joint funding proposal or programming, contract for combined administrative services, etc.) evidenced by (1) an offer (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration.
Strategic Alliance/ConsortiumOrganizations remain independent, pool resources & gain new opportunity; there exists an arrangement that shares resources to undertake a specific, mutually beneficial project; is less involved and less binding than a joint venture; requires close organizational coordination to provide complementary programs, eliminate duplicative services and administrative redundancy, and/or to conduct joint fundraising, public relations.
PartnershipA company is formed, as a separate entity, jointly owned and operated by the people in the partnership, when the parties involved agree to share the business’s profits or losses proportionately & agree to cooperate to advance their mutual interests.
Varied Models of Affiliation
Sole Member ElectionThe sole voting member retains the rights to certain minimally required Board approval actions that are reserved exclusively to the sole member in the governing documents, in addition State law provides certain protections for all voting members of the nonprofit corporation.
What’s Past is Prologue(William Shakespeare – The Tempest)
“History sets tHe context & stage for tHe present…”
Capacity, Services/Geographical Enhancements, & Reinvestment Results
Revenue, Earnings & Balance Sheet Results
Selection of an Affiliate Results
…setting tHe stage for tHe future
AFFILIATE SCFF CPPAFFILIATION DATE 1/16/2016 1/27/2016
Increase (Decrease) in # of PopulationServed
56% 11%
Increase In # of:New Program Services/Payors
1/0 4/4
Increase In # of:Residential Beds/Service Geographies
68/1 0/0
Additional Grant $ $ 10,000 $ 952,000
Gross Revenue Increase -Year-over-Year Average
$ 16,000,000 $ 980,000
Net Margin Increase Year-over-Year Average
$ 1,975,000 $ 95,000
Capacity, Services Enhancements & Reinvestment Results
ECI2/24/2017
(-1%)
2/1
8/1
$ 5,300
$ 1,300,000
$ 610,000
NHTS9/29/2017
(-13%)
0/0
0/0
$ 233,000
$ 388,000
$ 165,000
CHOR11/3/2017
28%
3/15
0/3
$ 528,000
$ 1,058,000
$ 15,000
Where affiliation among peer Organizations advances Missions and promotes reinvestment into services quality creating positive people impacts.
Fiscal Year EndedJune 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019* June 30, 2020^
Revenue $ 51,000,000 $ 63,000,000 $ 113,811,000 $ 151,390,000 $ 349,820,000
Operating Surplus $ 1,000,000 $ 2,200,000 $ 2,400,000 $ 2,500,000 $ 8,000,000
Total Surplus $ 1,300,000 $ 3,000,000 $ 24,228,383 $ 27,435,000 $ 45,000,000
Net Assets $ 3,000,000 $ 6,000,000 $ 30,228,383 $ 57,673,383 $ 102,673,383
* Projected, includes no new affiliates in Fiscal Year
^ Includes 2 Projected New Affiliates
Revenue, Earnings & Balance Sheet ResultsWhere consolidation under the Constellation strengthens the Affiliates & their Network.
Time Frame 1/16/16 - 6/30/16 7/1/16 - 6/30/17
Total Number Organizations Affiliated 2 1
Total Number Organizations Vetted(Our discovery, their outreach, others introduced)
4 7
Total Number Organizations Provided NDA/LOI/Term Sheet
(Inperium decision to advance conversation)
2 5
Total Number Organizations where detailed Information Exchange and/or Comprehensive
Conversations occurred2 4
Total Organizations Withdrawn from Consideration
(Affiliate must be strengthened & strengthen the Constellation)
2 3
Total Number Different States engaged based on State of Incorporation
1 2
Total Number Distinctive Service Lines Approached
3 3
Selection of an Affiliate Details & Results
7/1/17 - 6/30/18 7/1/18 - 12/31/18
7 3
71 57
58 47
23 12
11 12
12 16
9 11
TOTALS
13
139
112
41
28
16
1280% of those Vetted moved to LOI/Term Sheet (112/139)
37% of those provided a LOI/Term Sheet moved to Comprehensive Conversations (41/112)
32% of those in Comprehensive Conversations resulted in Affiliation (13/41)
Where engaging in the conversation, making the CHOICE to explore the options & deciding to carry on the efforts to conclusion is a reciprocal CHOICE.
Introducing:Inperium, Inc.
501(c)(3): A nonprofit organization in the federal law of the United States (US) exempt
from some federal and state taxation that can receive unlimited contributions fromindividuals & corporations; its primary activities are charitable, educational, or other asdefined by Title 26 of the US Code (USC).
509(a)(3): A supporting organization that is a charity which carries out its exempt
purposes by supporting other exempt organizations that are usually other public charitiesand either are or are not functionally integrated.
Providing financial resources & back office support to allow organizations to focus on fulfilling their mission & quality using a
unique affiliation structure that unlike traditional mergers & acquisitions, respects their individual culture & identity.
501(c)(3) & 509(a)(3)Background/Creation & Overview
Inperium reached full readiness for implementation in January of 2016 with the design & methodology being derived from years of examining other business combinations & using experiences gained from the beginnings of Supportive Concepts for Families, Inc. in 1993.
Challenges Faced: Revenue stagnation & ability to address systems
changes, lack of capital to meet wait list demands, technological upgrades
required, talent pool lacking, opportunities for staff advancement, access to
reasonably priced employee benefits & need to maintain current & offer more
services within our revenues.
Attempts Made: Finding a partner failed after efforts in State (PA) – out-of-
State (NJ) – profit/publicly traded & non-profit consolidators.
Different & Creative Approach: Fostering resourcefulness & allowing
for control/autonomy; using ALL that was learned through the struggles & options
discovered during search for viable business combinations that increases
efficiency in accomplishing parallel goals without sacrificing culture, Mission &
operational entrepreneurship.
Background - Creation & Overview
is created!
We are a Constellation company of non-profits & for-profits that provide person-centric health-related supports & other related business services to the Communities it supports ensuring that there is an equilibrium between the company’s mission & vision while reflecting person focused values.
We support & assist the affiliated companies to ensure a robust array of quality services, financial diversity/strength & continuity of care by maximizing resources while expanding upon our proven track record of developing, revitalizing, & growing business enterprises that leverage resources to achieve quality results.
We guide other enterprises through transformation management, with strong & effective leadership and an on-going commitment to providing quality outcomes to all stakeholder representatives through introduction of a focused strategic planning process.
Background - Creation & Overview (cont.)
The activities of INPERIUM, INC. are governed by a Board of Directors. In accordance with their Bylaws, the majority of the members of the Board are persons who also serve as
directors of the Supported Organizations. The current officers of INPERIUM consist of a President & Chief Executive Officer, a Vice President, a Secretary, and a Treasurer.
We are a Pennsylvania nonprofit corporation, whose sole member is Inperium, Inc., founded on 6/7/2017 & is a 501(c)(3) & 509(a)(3).
IMS was formed by Inperium to be a philanthropic supporting organization & through a management services agreement performs and carries out the operational, management, administrative, staffing and other shared services in connection with the operation of the Supported Organizations to assist them with fulfilling their respective missions; the fees collected from the Supported Organizations are paid at fair market value and is the estimated actual cost to IMS to provide the services.
Inperium determined that the formation of a new nonprofit corporation dedicated to servicing the Supported Organizations would create operational synergies that would enable the Supported Organizations to operate more efficiently and would enable them to more successfully further their Section 501(c)(3) missions of providing comprehensive services to the communities they serve.
IMS is the employer of all the Supported Organizations staff and supplies the employees to the particular Supported Organization.
INPERIUM MANAGEMENT SERVICES (IMS) is created!
Background - Creation & Overview (cont.)
Inperium Management Services reached full readiness for implementation in January of 2017 with the design & methodology being derived using experiences gained from the beginnings of Supportive Concepts for Families, Inc. in 1993 & the needs of the initial Affiliates in the Network Constellation.
Essentials: Needed access to homogenized back office systems, services & software as systems, leveraged
capital access to meet spending demands, technological upgrades, recruitment, retention & opportunities for
staff advancement, pooled scale purchasing economies, insurances pricing benefits, shared administrative
functions around fiscal/finance, human resources management, business operations & legal, compliance,
training & facilities/fleet.
Mission, Vision & Core ValuesLogo Evolution & Explanation Inperium Network Structure
Inperium, Inc.Preamble, Mission, Vision, Values & Logo Explanation
PREAMBLEInperium, a network governance organization, creates business constellations through affiliation, while honoring its
supported organizations’ autonomy, missions & services respecting their unique histories, identities & cultures. Inperium offers, access to strategic network partnerships and its governance platform to enhance sustainability & quality.
MISSIONInperium creates opportunities for advancement and innovation to service-oriented affiliates to further their missions by
providing a platform of value added services and partnerships.
VISIONTo be recognized as a constellation of entrepreneurial Organizations using our collective talent and systems to enhance &
sustain Affiliates’ Mission and Values.
CORE VALUESWe are Committed To…Make it Happen Through: Collaboration - Excellence
Transparency – Diversity – Innovation
LOGO EXPLANATIONTranslated in Latin - “Inperium” represents command, mastery & order; our world is comprised of many layers, full of
prospects & associations that need to be working in synchronization if our value is to be meaningful; the rings represent a realm that calls to mind a hive/constellation working in harmony with a unifying support axis reflecting the stability
offered to the affiliated organizations.
PREAMBLEInperium Management Services (IMS) is a value chain benefactor, utilizing workforce talent and scale
economies to provide staffing, systems and service platforms through a hybrid global-local approach while cultivating positive people impacts & improving quality.
Inperium management services, inc.Preamble, Mission, Vision, Values & logo explanation
MISSIONTo supply talent and operational systems to service-oriented customers and networks by providing value and savings
leveraging our collective resources with peerless customer service.
VISIONTo be recognized as a premier employer and the leading provider of operational systems & platforms
for our customers to benefit their Missions & Communities.
CORE VALUESResponsiveness - Quality - Deliver Cost-Effectiveness - Transparency
LOGO EXPLANATION
United with the Inperium logo, as the predominate central figure, the bee & its indiscriminate flight path suggest an intent centralized management team leader coordinating all the network constellations back office & shared support
activities.
Inperium Management Services, Inc.
(IMS)
Inperium Employee Ownership
(IEO)
Inperium Affiliate Services
(IAE)
Inperium Affiliate Administrative Solutions
(IAAS)
Inperium Affiliate Staffing
(IAS)
Inperium Administrative & Talent Services, LLC
(IATS)
*Former ISS, LLC
Affiliated Companies
Inperium network Structure
IAE is the operational division of IMS that the Affiliates interactwith, employees pay is processed from, as an example, & wherethey receive their selected back-office services.
IMS provides the customary services bundle &those ad hoc Affiliate elected services that aredetermined to create the synergies and scaleleverage savings through a monthly fee agreement.
IATS offers Organizations, not affiliated withInperium, the opportunity to buy some of theservices offered to Affiliates at a cost greater thanthe fee charged to Affiliates.
Inperium makes available the consolidationplatform through our shared governance modelthat creates Constellation sustainability andperpetuates quality.
IEO, supported by the for profit Enterprises under the Constellation, maintains & oversees the Employee Stock Ownership Plan (ESOP).
WHY to Affiliate A Dozen Reasons
Strategic Fundamentals
A Dozen Reasons WHY to Affiliate with Inperium
1. Economic pressures; financial worries; a strained balance sheet; an unfavorable cost position2. Limited debt capacity to meet current or short/long-term capital needs3. Inability to attract and retain qualified Leadership & Staff4. Reduction in total market share and a lack of profitable service lines5. Poor services implementation, delivery & quality of care6. Deteriorating utilization & financial performance trends
7. Weakened position in negotiating rates with payers8. Inability and/or reluctance to pursue new opportunities 9. Create synergy & efficiencies by combining business activities 10. Need to diversify business lines/geographies and/or sharpening business focus 11. Growth stagnation & an opportunity to cultivate market share12. Increase/leverage supply-chain pricing power
Constricted Capabilities -- Increasing Costs -- Diversify ServicesStrategy -- Adding Value to People -- Competing for Grants
Staffing Vacancies -- Organic Growth Sluggishness
Inperium is BEHOLDEN to:
1. Strategic Constellation Architect2. Multi-State Network Orchestrator3. Multifaceted Value Chain Benefactor4. Customizable Global-Local Approach5. Honor & Respect Unique Missions & People6. Quality World Class Customer Service Orientated
Inperium must REMEMBER:
1. Affiliates have a voice, standing & are essential to success2. Honoring feedback and listening are important3. All opinions matter & quality is important4. Timeliness of decisions & action differentiate us5. Transparency is a must6. Conflict will need to be managed7. Not everyone will always agree
Inperium - MAKE IT HAPPEN:
1. We will be judged on ALL our interactions2. How we manage our uniqueness will determine our success3. Our overall financial successes will not define us - satisfaction reported by our Affiliates & their quality will4. We will need to decline those that need us most for the safety/security of the Constellation5. We can overcome anything through listening without judging, seeking feedback & meeting ALL our needs.6. Learning how decisions impact so much more can be frightening7. As distance from the pulse grows the impacts of misinformed actions can be detrimental8. Adding new leadership will become more challenging & transformational change through Leadership if key.
The Strategic fundamentals
Welcome Back, Kotter -Transformational Change
SEEING THE NEED TO EMBARK ON AFFILIATION
Leadership Holds the KEY
“A great change leader creates other change leaders” – John Kotter
www.kotterinc.com
Make a bold aspirational opportunity statement that communicates the importance of acting immediately around Affiliation.
Effective people born of its own ranks must guide, coordinate and communicate the activities working towards Affiliation.
Clarify how the future will be different from the past with Affiliation; how you can make the future a reality through initiatives linked directly to the vision.
Large-scale change can only occur when people rally around the common opportunity - Affiliation.
Removing inefficient processes & hierarchies provides the freedom necessary to work across silos and generate real impacts that are streamlined with Affiliation.
Wins are the results & they must be recognized, collected and communicated – early and often – to track progress and energize to persist to full Affiliation integration .
Affiliation vision is a reality when you press harder & be relentless with initiating change; after the first successes credibility can improve systems, structures and policies.
Articulate the connections between the new Affiliation behaviors & organizational success, making sure they continue until they become strong enough to replace old habits.
①
②
③
④
⑤
⑥
⑦
⑧
8 Step process – after Seeing the need
Affiliation with
Inperium
Leadership & Leading During ChangeOrganizational Leaders must be the first to recognize:
❖ Collective understanding can fashion an intelligent strategy & create leaders. ❖ Underestimation of the magnitude of the forces that reinforce complacency will cripple the Organization. (Recognition)❖ A higher rate of urgency doesn’t imply panic or fear, it is where complacency is virtually absent.❖ Establishing a sense of urgency is critical to creating momentum and responding to shifting conditions.❖ Historical success produces stable and inwardly focused organizations while reinforcing the status quo.❖ Hard truths can be demoralizing & inspirational at the same time resulting in action.❖ In a change effort, culture remains important but comes last.❖ One leader cannot produce organizational change, it requires a group – a TEAM. (Alone not an option)❖ The rate of change isn’t slowing any time soon.
Communication, Collaboration & Celebration:
❖ Communication with & understanding can complement one another’s activities and create a thriving, successful network.❖ The more information that is shared the more understanding is achieved.❖ The greater the level of communication the stronger the TEAM.❖ Working together promotes a sense of TEAM.❖ Working together to produce or create change maintains organizational cohesiveness. ❖ Important to celebrate the successes in order to highlight the hard work & positive results while learning from any missteps.
Affiliation: A Strategic Alternative
HANDOUT
Constellation HighlightsOperational Schematic
Services Lines & PayorsGeographies
Inperium Shared
Services, LLC
Inperium Employee Ownership
Fortis Holdings,
Inc
Inperium North
Carolina
Wake Enterprises,
Inc. New Horizon Treatment
Services, Inc.
Inperium of New Jersey,
Inc.
Inperium Pennsylvania
Inperium PA Adult Services
Inperium PA Children
& Family
Sustainable Electric & Lighting
Solutions, LLCS Automotive
& Fleet Services, LLC
Fortis Housing Services,
LLC
Community Prevention
Partnership, Inc.
Edison Court, Inc.
Youth Services
Agency, Inc.
The Children’s Home of
Reading, Inc.
Reading Specialists
Educational Association,
Inc.
Inperium Management Services, Inc.
South Jersey Behavioral
Health Resources, Inc.
Inperium of New York,
Inc.
Supportive Concepts For Families, Inc.
Person Driven Clinical
Solutions, LLC
Callan Housing, LLC
Harmonycrest Personal Care Services, LLC
Alvarium Health
Care, Inc.
Operational Constellation
Child Welfare/Juvenile Justice23%
Behavioral Health13%
IDD49%
Adult Forensics4%
Education 3%
For Profit 4%
Drug and Alcohol4%
Inperium service lines
Projected 2019 Annualized Revenue
Total People in Service Lines
Inperium Service Lines Revenue Rounded
Child Welfare/Juvenile Justice $ 35,000,000 Behavioral Health $ 20,000,000 IDD $ 75,000,000 Adult Forensics $ 6,500,000 Education $ 4,000,000 For Profit $ 6,200,000 Drug and Alcohol $ 5,200,000
Inperium Service Lines Total
Child Welfare/Juvenile Justice 2,650Behavioral Health 3,430IDD 680
Adult Forensics 210Education 890
Drug and Alcohol 910
GRAND TOTAL 8,770
(State/Federal) - WAIVER ELIGIBLE
49%
State - WAIVER INELIGIBLE3%
State/County - CHIPP1%
(State/County Funds) - BASE2%
CYS/JPO 11%
MCO 6%
SCHOOL DIST3%
Federal - Grant2%
State - Grant2%
DONATIONS1%
State/Federal - Medicaid14%
Private Pay2%
For Profit Enterprises4%
Inperium payor sourcesProjected 2019 Annualized Revenue
Total Payors in Source Class
Inperium Payor Source Class Revenue Rounded
(State/Federal) - WAIVER ELIGIBLE $ 75,000,000
State - WAIVER INELIGIBLE $ 5,000,000
State/County - CHIPP $ 2,400,000
(State/County Funds) - BASE $ 2,700,000
CYS/JPO $ 17,400,000
MCO $ 9,500,000
SCHOOL DIST $ 4,000,000
Federal - Grant $ 2,552,000
State - Grant $ 3,400,000
DONATIONS $ 1,250,852
State/Federal - Medicaid $ 21,000,000
Private Pay $ 2,400,000
For Profit Enterprises $ 6,200,000
(State/Federal) - WAIVER ELIGIBLE 3
State - WAIVER INELIGIBLE 3
State/County - CHIPP 1
(State/County Funds) - BASE 14
CYS/JPO 29
MCO 6
SCHOOL DIST 44
Federal - Grant 6
State - Grant 7
DONATIONS 3,200
State/Federal - Medicaid 3
Private Pay 1,900
For Profit Enterprises 400
GRAND TOTAL 5,616
Inperium Geographies
The DecisionTop Challenges Overcome
Areas of Board/Executive Concern Cured
Nonprofit Standards, A Benchmarking Survey – June 2018
www.bdo.com
• Multi-service Lines• Enhancing Quality• Focus on best
practices• Continuum of care• Extensive footprint• Executive Resource
Knowledge
Value Based Purchasing & Information Technology
Agency Enhancements & Services Demand Leadership, Staffing & Succession Planning
Creating Impacts & Efficiencies
Cost Containment & Fundraising Fraud Risk
• Career ladder & growth • Multiple disciplines• Greater visibility • Across the lifespan• Better wages & benefits• Targeted staff recruitment• Succession planning• Wage benchmarking
• Creative Sustainability• Programmatic Expansion• Insulation from Payer Shifts• Expand in New Areas/Services• Diversification of payers • Resource Sharing
• Real Time Updates to Systems
• Track Indicators & Outcomes for Payments
• Advanced IT Platforms• User-Friendly Applications• Dash Boarding & Reporting• Fuels Innovation & Growth
• Obligated Credit Group• Master Trust Indenture• Access to Capital• Flexible Financial
Resources• Non-Bank & Other
Financing• Pooled purchasing
leverage
• Scalable Management• Promote Partnerships• Define System Needs• Cross-Systems
Connections• Separation of Duties • Quality Control Systems• Global Purchasing
OvercomeChallenges
Value Creating Proposition: AffiliationThe Inperium Value Chain
Network Constellation Orchestration
Sine Wave Trends
The Organizational Death Spiral
SUP
PO
RT
AC
TIV
ITIE
S
Value-Creating Activities
Finance and Accounting
Facilities and Fleet Management
Human Resources Staffing and Administration
IT & Technical Infrastructure
• Accounting• Auditing• Taxes• Treasury/Banking• Cash flow
Management• Payroll/ Payroll
compliance• Time &
Attendance• Representative
Payee Management
• Billing and Collections
• Budgeting & Forecasting
Risk Management Insurance & Legal
Value Chain
• Human Resources• Employee
Recruiting• Benefits Review
Design and Participation
• Employee Training
• Centralized Scheduling & Human Resources Deployment
• IT Operations Budgeting and Planning
• Help Desk Support
• Desktop Network and Server Management
• Systems Support• Mobile
Technology Deployment and Management
• Website and Domain Administration
• Property Casualty and Liability Insurance
• Worker’s Compensation
• Statutory /Regulating and Corporate Compliance and Reporting
• Incident Management
• HIPAA OSHA• Quality
Management
• Facilities Maintenance & Repair
• Site Location & Development
• Energy Conservation
• Complete Fleet Management and Repair Services
• Zoning & Code Compliance
• Green Energy Solutions
Delivery of all shared back office & administrative services
post-affiliation through superior customer service &
systems platforms.
The value chain displays the activities that generate
savings, create
sustainability, foster
advancement & other
deliverables.
Working in unison within the Organizational Constellation
creating surplus for the Affiliate Partners to use towards their
reinvestment goals.
Enhancing quality by providingleveraged support activities withfewer distractions that allow for agreater focus by the affiliate staff &management on excellence, mission,vision & programmatic operations.
Inperium adds value through various processes & identifies the areas we recognize that increase the efficiency of our customers with the overall goal to deliver maximum value for the least possible total cost & create competitive advantages for reinvestment.
Affinity Forensic
Services, LLC
Inperium of New Jersey,
Inc.
Network Constellation Orchestration
Board OrchestrationAffiliate Network Architecture
Intra-Network Collaboration
In-Network Service Offering
Inperium creates a network of peers in which the contributors interact & share in the value creation; selling products or services, building relationships, sharing advice, giving reviews, collaborating & co-creating.
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
0 5 10 15 20 25 30
Margin % Sine Wave – Unaffiliated Organization Trend
-2.00%
0.00%
2.00%
4.00%
6.00%
0 5 10 15 20 25 30
Margin % Sine Wave Affiliated Organization Trend
Mar
gin
in %
Mar
gin
in %
Time Period
Time Period
0 5 10 15 20 25 300 5 10 15 20 25 30
Sine, Sine, Everywhere a Sine…
Waves are narrow and tall reflecting volatilityTrend line flat or heading down
Waves are wide and shallow reflecting stabilityTrend line heading up
Margin Cured by Inperium Affiliation – Sine Wave Graphic Comparison Overlay
0%
Time PeriodMar
gin
Pe
rce
nt
Sine Curve - geometric waveform moving near zero in cyclical patterns that develops a leading indicator & trend.
Sidestep Organizational Death Spiral - AffiliateDeath Spiral - situation that occurs when an Organization experiences disproportional revenue to cost ratios & ultimately its DEATH.
Ongoing confluence of factorsEnvironment of constantly rising costsIncreasing regulatory burdens
Organization Unsustainable
Unsuccessful providing quality servicesDifficulty demonstrating outcomesDangerously strained cash flow Erosion of endowments to fund operations
Unfunded/underfunded mandatesFacing capitated rates Unable to address the costs of care
Last ditch efforts to reduce staffDangerous reductions in cost Dilution of service quality
-Affiliation Model
Key to Model Success:Differentiators, Messages &
Performance Indicators/Dashboards
Reinforcing and Developing Affiliates Inperium’s service offerings are not motivated by a slash-and-burn mentality. Partners who work with Inperium are able to focus on achieving their mission based objectives, while the Inperium team provides access to a best-in-class system of core administrative and back-office services that enhance quality & reduce distractions that allow for a greater focus on mission and programmatic operations.
Back-Office Cost EfficiencyThrough the use of cutting-edge software, training, technical expertise and flexibility, Inperium is able to provide major
upgrades to its partners’ systems by pooling resources with multiple payers at lower prices. As a result, partners realize efficiencies rapidly and pay less than if they were functioning independently.
Employees are ImportantInperium has made it a priority to respect and retain its partners’ employees. As its network of partners expands, employees can change positions within and among partner organizations to gain new experience and build their careers.
Diverse, Experienced LeadershipInperium’s Executive Team bring extensive and varied experience to its mission. Many on the team were previously and/or currently working at non-profits that have become partners and have witnessed firsthand the benefits that Inperium’s model provides.
Key Differentiators
Partner, Not MergerInperium’s role with a company is a true partnership, not a merger or slash-and-burn endeavor. Affiliates’ employees, culture and mission ALL remain priorities.
Achieving Growth, Increasing RevenueInperium provides support and solutions that help affiliates grow professionally and generate additional revenue, which they
can use to innovate their offerings and help their clients.
Access to CapitalBy leveraging business operations, partners are able to gain access to additional capital.
Mission, Not Operations FocusInperium’s model aims to reinforce, develop and support its affiliates by providing advanced administrative and back-office systems. With these systems in place, affiliates can more efficiently fulfill or enhance their missions.
Complete TransparencyInperium operates with integrity and complete transparency so affiliates can have direct access to answers, key personnel and cutting-edge platforms.
A Seat at the TableInperium appoints affiliates to its board, giving them a say on issues as well as scale and capital without infringing on their day-to-day business.
Key Messages
Key Performance Indicators/DashboardsApproved Program Capacity & Productivity % YTD
SCFF Net New Referrals 10
SCFF Approved Program Capacity % (96% benchmark) 92.2%
ECI Approved Program Capacity % (90% benchmark) 91.5%
PDCS Productivity % (90% benchmark) 74.6%
CHOR Approved Program Capacity % (90% benchmark) 58.9%
CPP New Grants/Programs Started 0
YSA Enrollment Participation % 82.7%
Affinity Enrollment Participation % 91.0%
Entities Days of Sales Outstanding (DSO)
Inperium (Consolidated) 48.4
Entities (DSO)
Inperium (Consolidated) 48.4
SCFFI 43.0
PDCS 45.5
SAFS 20.5
SELS 42.6
CPP 32.3
ECI 59.6
The Art of Deal Flow Perpetual Movement
The CASH Matter
Growth perpetuates the model, systems enhancements and opportunities while diversifying business lines and payer quantity/quality to ensure permanency of Inperium and its Family of Affiliated Companies.
We seek to on board not less than three (3) additional Affiliates per year utilizing a measured & systematic process ensuring to not overextend staff, systems or finances. This requires that we do background vetting & research on more than sixty (60) potential prospects, engage in Letter of Intent discussions for more than forty (40) & perform due diligence on twenty (20) potential affiliates.
Governing the existing affiliates to maintain their success and quality is critical.
Using a methodical approach for building a presence in a new geography, expanding services platform/continuum of care in a current geography & creating/organizing opportunities for current affiliates are essential; focus on our approach that allows us to rely on the local/existing Board and Executives/Staff to cultivate opportunities in their region, services line and payer space.
Leverage the CEO/Executive/Board of Directors rich Leadership that includes all the key stakeholders from all Affiliates to assist in deal flow, operational measures and advancement of the Mission; through affiliations our focus on growth at Inperium coexists with the CEO/Executive Director advancements pinpointing their focus on the Affiliate need with the backroom support necessary.
All organizational elements, Executive Staff(s) & Board of Directors must continue to work in concert as a whole to manage growth and sustainability.
Perpetual Movement
FACTORS related to LIQUIDITY:Growth & expansion of geography, payors, cash, accounts receivable (AR), and short term line of credit (LOC) availability.
CONSIDERATIONS related to CASH:Non-profits lack access to traditional equity capital therefore, operating surplus(s) & anappropriate combination of short and long-term debt are the primary sources ofoperating cash.
ACCOUNTS RECEIVABLE & LIQUIDITY:Increases in Accounts Receivable Balance create a timing issue related to operating cash& cash flows; this is mitigated by a Working Capital Line of Credit that – as an example - isblanketed at 80% of the qualified receivables.
LONG TERM STRATEGY:Reduce overall expenses among affiliates to increase revenues; & the effective leveragingof appreciated capital assets serves to enhance operating capital via long-term debt; a Obligated Credit Group allows each affiliate to use the Master Trust Indenture arrangement to provide access to capital & financial resources.
The CASH Matter
Legal EntityStructure - Models
Pre & Post Affiliation
Board Composition & Census
New Affiliate and Inperium (Pre-Affiliation)
New Affiliate
Direct Attention
Staff
Back Office/Admin Services/Staff
AssetsEINMissionThe Foundation
ServicesService Contracts
Board of Directors
Shared Services Systems/ Back
Office Staff
Inperium, Inc.
Professional & Direct Services
Staff
Inperium Management Services, Inc.
Union Direct
Attention Staff
Board of Directors
Affiliate Class Directors
Executive Committee
Elected Class Directors
New Affiliate and Inperium, Inc. (Post affiliation prototypical approach)
New Affiliate
Back Office/Admin Services/Staff
Board of Directors
Inperium, Inc.
Professional & Direct Services
Staff
Inperium Management Services, Inc.
Board of Directors
Sole Member Directors (2) Election1
Affiliate Director Election2
Employee Services Agreement
Shared AdministrativeServices Agreement4
Shared Services Systems/ Back
Office Staff
Existing staff become employees of IMS, Inc.3
Systems & Administration Staff integrated into IMS, Inc. & utilized across affiliates
Affiliate Class
Elected/ Legacy Class
New Class
AssetsEINMissionThe Foundation
Services
Service Contracts
Union Direct
Attention Staff
Direct Attention
Staff
1- From Elected Director class of Inperium, Inc. Board2- Total Number & class of Director determined by metrics of affiliate3- Staff retain their original date of hire4 - Agreement provided at cost & less than market rate
Shared Governance Standing
Integration of Affiliate
Inperium, Inc. Board Composition & Census
Inperium Board
Executive Committee
Affiliate Class
Ad-hoc Board Committees
Elected Class
4 Total
11 Total
2 Employee
3 Non Employee
3 non employee Executive
Committee Members
2 Affiliate Class Directors
Salary Review Committee
Inperium Board consists of notless than three (3) nor more thantwenty-five (25) Directors; at leastfive (5) of the Directors shall bedesignated as Elected Directors; theremaining directors shall consist ofAffiliate Directors. The majority ofthe members of the board ofdirectors shall, at all times, bepersons who also serve as Directorsof the Supported Organizations.
Affiliate Class may not also serve asan Elected Director; represent eachSupported Organization; are appointedDirectors to the Board of Directors bythe governing body of the SupportedOrganization.
Elected Class are elected by the members ofthe Elected Class; may (not required) representa Supported Organization; their votescollectively carry a weight of fifty-one percent(51%) of the votes cast by the total Board; amajority of the Elected Directors and at leastone (1) Affiliate Director shall be necessary toconstitute a quorum; fifty-one percent (51%) ofthe votes cast on actions must originate fromnon-employee Elected Class Directors.
Executive Committee consists ofthe President, Vice-President, one (1)of the Treasurer or Secretary, & three(3) of the current non-employeeElected Directors; the number ofmembers who are Officers neverexceeds the number of Non-EmployeeMembers; has powers, duties,responsibilities & authority in betweenmeetings with limitations & aresubject to the ultimate direction &control of the Board.
Inperium, Inc.
Supportive Concepts For Families, Inc.
Community Prevention
Partnership, Inc.
Edison Court, Inc.
Inperium Management Services, Inc.
Inperium Of New Jersey,
Inc.
Sole Member
#2
Youth Services
Agency, Inc.
The Children’s Home Of Reading,
Inc.
Reading Specialists Educational
Association, Inc.
AlvariumHealth Care,
Inc.
Inperium of New York,
Inc.
Inperium, Inc. Affiliate Board Census (Snapshot)
Total Member
#9
Sole Member
#2
Total Member
#7
Sole Member
#2
Total Member
#9
Sole Member
#2
Total Member
#6
Sole Member
#2
Total Member
#15
Sole Member
#2
Total Member
#6
Sole Member
#2
Total Member
#9
Sole Member
#2
Total Member
#9
Sole Member
#2
Total Member
#15
• Subsidiary Board Censuses are not listed for Supportive Concepts for Families, Inc., Reading Specialists Educational Association, Inc., New Horizons Treatment Services, South Jersey Behavioral Health Resources and The Guidance Center, and The Children’s Home of Reading
Employee Stock Ownership Plan (ESOP) Model
Entering the C3SOP
Inperium: Entering the ESOP
Inperium, Inc.
Participating Affiliates
Inperium ESOP Trust*
* Formerly Supportive Concepts for Families, Inc. ESOP Trust+ For Profit S Corp.
Fortis Holdings +
SAFSSELS
Fortis Housing Services
ISSNotes:• The stock contributions must be recurring and substantial
but the ESOP cannot own more than 49% of Fortis.• The Fortis stock must be appraised on an annual basis to
determine fair market value.• There will be UBIT (unrelated business income tax) on the
Fortis profits that are not allocated to the ESOP proportional ownership. The percentage owned by the ESOP is not subject to UBIT.
1. Real Estate
1. Consideration ($ or Notes)
Currently, 100% ownership as 2nd tier subsidiary
Inperium SponsorsESOP Trust
2. Stock
3.
4. Cashless benefit expense
1. Participating Affiliates sell real estate to Fortis Housing Services in exchange for cash and/or notes (may trigger transfer tax liability)
2. Fortis Holdings (or Fortis shareholder) contributes stock to the Inperium ESOP (stock contributions reduce the cost of administering the ESOP)
3. Shares are allocated to the accounts of eligible employees of Participating Affiliates (eligible employees generally are salaried employees who work 1,000 hours in the year)
4. The cashless benefit expense of the contribution (the fair market value of the stock contributed) is apportioned proportionally to the Participating Affiliates
Bylaws & Reserve Powers
Sole Member – Minimum Required
Inperium, Inc.Sole Member Reserve Approval Powers – Minimum Required
• Corporate Governance
• Capital Investment
• Business Combinations
• Asset Disposition
• Acquisitions & Affiliations
o Election/Reelection/Removal of a Director; Amendment of Articles of Incorporation/Bylaws; Change in business purpose/legal name/name(s) Corporation does business as (^);
o Capital contribution/incurrence/guaranty of any debt (*);
o Merger/Acquisition/Division or conversion/Sale to another entity or business other than Sole Member or its affiliate;
o Sale/Lease/Encumbrance/Other disposition of all/substantially all of the Corporation’s assets; filing for bankruptcy/insolvency/dissolution/liquidation;
o Acquisition of a subsidiary or affiliate including by a related entity
(^)Post timeframe outlined in Definitive Agreement
(*)An amount in excess of Board of Directors established amount
Governance Standing Detailed
Board of Directors
HANDOUT
Highlights: Governance Reserve Powers• The Sole Member elected is Inperium, Inc.
• The Sole Member rights are NOT to “initiate and implement” BUT to “approve” the actions/matters required by law.
• Inperium will NOT have the right to take unilateral action but will have the right to approve actions by the Affiliate Board.
• There is no requirement to maintain 51% control of the Affiliate Board.
• The Affiliate representation on the Inperium Board results in a Board chosen by the Affiliate will govern the Affiliate.
• To the extent the Affiliate needs Inperium approval for actions/matters the Affiliate will have a say in such approvals.
• To the breadth it is permitted by law further limitations of the Sole Member rights can be customized by the Affiliate Board.
Shared Services:Inperium Management Services
Highlights & Other Offerings
Abbreviated Listing of ServicesBLACK: Base Customizable - - - RED: Optional
FINANCE
➢ Accounting
➢ Auditing
➢ Financial Statement Preparation
➢ Tax Services
➢ Cost Reporting
➢ Treasury/Banking & Cash Flow Management
➢ Payroll
➢ Time and Attendance
➢ Representative Payee Management
➢ Billing, Collections and Cash Application
➢ Budgeting/Forecasting
➢ Key Performance Indicator (KPI) Reporting
HUMAN RESOURCES
➢ Human Resource Management
➢ Employee Recruiting
➢ Employee Benefits Review, Design and Participation
➢ Compensation Design and Administration
➢ Employee Training
▪ Web Based Staff Training
➢ Workforce Planning and Deployment
CENTRALIZED INFORMATION TECHNOLOGY
➢ Vendor Management & Procurement
➢ Remote & On-site Help Desk Support
➢ Managed Backups of Critical IT Resources & Data
➢ Network Design, Security and Administration
➢ Server Management
➢ Virtualization
➢ Remote Management of Critical Systems
➢ Software Licensing Management
➢ Systems & Software Patching
➢ E-mail and Collaboration Services & Support
➢ Secure Remote Access to Applications & Files
➢ Website and Domain Services Administration
➢ Electronic Medical Records (EMR) Support
➢ Microsoft Exchange Webmail and Outlook E-mail
➢ Dell Sonicwall Remote Access VPN Services
➢ Microsoft Active Directory Management; SQL
Server; Office Suite
➢ Microsoft Server & Workstation Operating Systems
➢ VMWare Server Virtualization
➢ Barracuda Secure Backup to the Cloud
➢ HP File & Print Services
➢ Business Intelligence and Analytics; Dashboards
PROGRAMMATIC ENRICHMENT
➢ Licensure and Accreditation
➢ Program Risk Management Reporting & Analysis
➢ Statutory/Regulating/Corporate Compliance
➢ Medication Management
➢ Transportation
➢ Company Programmatic Licensure & Review
➢ Health Series Trainings
➢ Progress Note Review
➢ MA Exclusionary Audits
➢ Quality Management Plan Creation
BUSINESS OPERATIONS
➢ Property, Casualty and Liability Insurance
➢ Facilities Maintenance and Energy Conservation
➢ Facilities Project & Development
➢ Zoning, Permitting & Codes Compliance
➢ Legal Services
➢ Governmental Regulations and Advocacy
➢ Policy Development
➢ Fleet Management and Repair Services
➢ Strategic Plan Development
➢ Grants Application & Grant Writing
➢ Worker’s Compensation Review
Quality - Program Compliance – Accreditation
Employee DevelopmentProgram & Regulatory Policy - Investigations
Highlights & Other Offerings
Advice - Agreements – Appeals – Contracts – Leases
Corporate Documents - Employee Claims - Legal Notices
Governance – Notary – Title Work – Tax Exempt Filings
Electrical, Security & Fire Systems Installations
Energy Efficiency Power Upgrades
Power Conditioning
Innovative Efficient Lighting
Electric Rebates/Incentives
Automotive Repair & Fleet Services Full Diagnostics
Oil Change - Tire Service - Air Filters – Brakes
Battery Service – Inspection EmissionsOPEN TO THE PUBLIC
Inperium Management
ServicesShared Services Listing
HANDOUT
Integration Process Sample:Information Technology
Data Integration Process/Systems Schematic &
Inventory
Data Integration Process and Technology
Systems Due Diligence1. Review affiliation business applications requirements2. Document Target Applications Inventory & Review3. Accumulate sample target datasets for review4. Develop custom data integration plan for affiliate based on
target applications integration to Inperium systems
Integration Detailed Plan1. Review data integration plan with Inperium integration
team & appropriate affiliate staff2. Test affiliate specific data integration plan using sample data3. Review and adjust plan based on testing results4. Update plan and schedule production data integration to
Inperium Systems
Inperium Affiliation / IntegrationIntegration Technology (Inperium MSSQL Data Warehouse / Application1. Input: Standardized Data Schema for data from Affiliate target systems2. Proprietary Data Transformation and QA application / Process3. Output: Standardized Data Schema for Inperium Applications
Affiliate Target Applications1. HRMS2. EMR / EHR3. General Ledger4. Accounts Payable5. Employee Time & Attendance6. Scheduling7. Payroll Data8. Benefits Management9. Billing / Accounts Receivable10. Fixed Assets11. Training Data Management12. Disconnected Data (i.e. Excel, Paper)
Inperium Applications1. HRMS2. EMR / EHR3. General Ledger4. Accounts Payable5. Employee Time & Attendance6. Scheduling7. Payroll processing & Management8. Benefits Management9. Accounts Receivable10. Fixed Assets Management11. Training Data Management
Information Technology Inventory
Description Version Use
Advantage TeleMessagingContracted service, proprietary system/process On Call System
Credible EMRCloud Based, vendor latest supported version EMR
Microsoft Office Office 2012 Outlook, Excel, Word
Microsoft Office 365 Latest Microsoft supported version Outlook, Excel, Word
MITC RS2, and MyMITC web version 2.4a Time & Attendance, Scheduling
Kronos Workforce Central Cloud Based, SaaS Solution Time & Attendance, Scheduling
Nurse Notes App Cloud Based, Appsheet v2.1Nursing On Call Notes & Notification
On Call, Facilities App Cloud Based, Appsheet v2.1 On Call Notes and Notifications
PaylocityCloud based, vendor supported, version 18.3.2.18
HRIS, Payroll, ERP, Training Management
PIFCloud based, vendor supported, PIFPro v1.16.0 Vehicle Fleet Management
Relias LMSCloud Based, vendor latest supported version Learning Management System
Set WorksCloud Based, vendor latest supported version EMR
SMARTCloud based, vendor supported, version 4.3.2.0 EMR, Methadone management
Solomon - Microsoft Dynamics Solomon 2015 General Ledger/AP/AR
Unicentric EMRCloud Based, vendor latest supported version EMR
Ring Central MeetingsCloud Based, vendor latest supported version
Web Meeting and Video Conferencing.
Google Chrome Latest Supported version. Internet Browsing
Internet Explorer v. 10 & 11 Internet Browsing
Adobe Acrobat Pro v. 2017 Pro. PDF creation and editing
DropboxCloud Based, vendor latest supported version
Due diligence files -Management, Legal
Description Version Use
Anti-Spam Cloud based, Barracuda Essentials latest version Email Anti-Spam scanning
Anti-Virus Sophos Endpoint Security v10.7 Anti-Virus
Anti-Virus Symantec Endpoint Security Anti-Virus
Anti-Virus Kaspersky endpoint Anti-Virus
Email encryption Services Cloud based, Barracuda Essentials latest version Secure Email communications
Connectwise Automate, Manage Cloud based, version 12.0IT Ticketing System, Systems Management
Database Environment Microsoft SQL Server 2008, 2012, 2016 Data Warehouse, App Databases
Database Environment Microsoft Cloud based Azure database DB for Oncall and Nurse notes app
Desktop Operating Systems Windows 2008, 2010, 2012. Apple OSX, Desktop Operating Systems
Microsoft Active Directory Services Microsoft Windows - AD Functional Level 2012 Microsoft Active Directory Services
Microsoft Exchange Server Microsoft Exchange Server 2010, 2016 E-mail, messaging
Microsoft Office 365 Latest Microsoft supported version E-mail, messaging
Ring Central Phones Cloud Based VOIP. V 10.0.0.30453 Phone System/Web Meeting
Server Operating Systems Windows Server 2008 R2, 2012 Server Operating Systems
Sonic Wall Firewall / VPN SonicWall SRA 4600, SMA6200 Remote Access VPNs
VMWare ESX VMWare ESX v6.5 Virtual Server Environments
Cisco Meraki MDM Cloud Based, vendor latest supported version Mobile Device Management (MDM)
Cisco Meraki Wireless Controllers Cloud Based, vendor latest supported version Wireless Network Management
Applications
IMS servers and critical resources are located in secure commercial data center.
Data Center provider: Direct Link, Inc. - Reading, PA
Services and infrastructure offered by Inperium Management Services IT Data Center
Multiple 42U secure equipment enclosures for servers and communication equipment
Multiple Power feeds to each enclosure
24x7x365 Power and cooling available
Multi level Physical access security
Load balanced network connections from Comcast Business and Affinity networks
Infrastructure
Data Center Operations
The Process:Next Steps & Approximate
Time Line
What’s Next?
1. Non-Disclosure Agreement1
2. Letter of Intent and Term Sheet2
• Draft executive/key staff contract language3
3. Due Diligence Efforts (ALL parties) • Fiscal/Programmatic/Business Operations and Legal review• Risk &Technology Assessment• Approvals Required4
4. Definitive Agreement5
• Board actions/consents/modifications/assignments/notices• Affiliate and Inperium
• Employment contracts for key staff• Administrative services/management services agreements
1. Confidentiality agreement permits sharing of basic proprietary information between the parties that wish to share with one another but restrict access by a 3rd
party2. Document outlining general provisions before agreements are finalized; written conceptualization of the affiliation that are non-binding or binding to either or
both parties that protects both parties until a finalized transaction and closing of the affiliation. Term sheet delineates fundamental terms before expending substantial resources on definitive agreements, finalizing due diligence and seeking 3rd party approvals
3. Details wage, benefit, stay & sign-on payments and other necessary employment terms for those key employees that are being encouraged to/and have chosen to remain as part of the affiliation process through closing
4. Determine what regulatory approvals are required from the appropriate departments, divisions, lending institutions and all other governmental bodies that are required to approve affiliation; evaluate if the approval is required prior to closing and if there is any potential for interpretation of the affiliation as a change in control
5. Converts Letter of Intent and Term Sheet to granular details of the affiliation
What’s Next? (cont.)
5. Regulatory Approvals6
• Attorney General
• Departments of Health/Human Services/ Licensure
• Lending Institutions
• Employee Benefit Programs
• Other contractually required
6. Closing7
7. Integration Planning8
8. Full Implementation
6. Provided in the form of a non-objection letter, formal approval letter based on a regulation, circular or law and provided by the regulatory body within the timeframe of their own guidelines
7. The actual legal date of affiliation after all other matters have been concluded and the date on which consolidation by the affiliate of its balance sheet, revenue & expenses and profit or loss with Inperium, Inc.; formal approvals required from all Boards
8. Period of time when due diligence, information learned by both parties is prioritized into a roadmap, a dashboard is created for tracking of the details within the plan, the work plan assignments are given to the responsible parties and the roll out to staff of the details of the affiliation occurs with Inperium Management Services, Inc.
Approximate Timeline: From Decision Day to Full Implementation
Non-Disclosure Agreement Execution
5 business days
01
Letter of Intent and Term Sheet
25 business days
02
Due Diligence Efforts60 business days
03
Definitive Agreement
30 business days
04
Regulatory Approvals
0 to 60 business days
05
06
Closing30 business days
Integration Planning30 business days
07
Full Implementation180 business days
08
210 240 420120 180905 30
Sample DocumentsNon-Disclosure Agreement, Sample LOI/Term Sheet & Abbreviated Due Diligence Checklist
HANDOUTS
The Sweater Song –How to:
Options for Undoing AffiliationA LAST RESORT:
When working towards resolution is unattainable…
Options Available - Dissolution of AffiliationMutual Consent* -Both Parties Agree(Divorce)
Details: Affiliate Board - Class A Director simple majority approvalInperium Board - Elected Class simple majority approvalApprovals by Attorney General, other regulators or courts may be required
Material Breach of Representations & Warranties^ – Either PartyDetails :
Corporation is in good standing/Accuracy & Authority of DisclosuresCompliance with applicable lawsAccuracy of Financial Statement & Disclosure of LiabilitiesConsents/Approvals made as required
Law of Contracts+ – Impossibility, Impracticability or Frustration of Purpose – Either PartyDetails :
Both parties must be aware of the primary purpose of the Affiliation Unexpected circumstances/expensive proposition that was not anticipatedUndermine the purpose of Affiliation & hindered from being completed to satisfaction
* Vote required for the voluntary dissolution will be driven by the bylaws
^ Dissolution may not be an available remedy for a breach of a representation or warranty & will depend on the nature of the breach & in most cases will not be a remedy
+ Doctrines are only available in extreme cases
Commonly Asked Questions
& the Answers
Affiliation with Inperium
Q. What would be the chief advantage of affiliation with Inperium for the Affiliate?
A. ENHANCING YOUR MISSION - sustainability and the ability for the affiliate to continue its mission, vision and services while offering
protections to the individuals it supports by being part of a larger organization. As part of the larger organization, Inperium, the affiliate is
able to be insulated from fluctuations in funding by leveraging economies of scale for back office functions and having a larger voice in the
marketplace among other safeguards.
Q. In regards to advantages of scale, what are the most predominant examples of scale advantage in your experience?
A. FINANCIAL BENEFITS - banking and Financial relationships, with regard to real estate and debt financing, to offer more favorable lending
terms; Workers Compensation & ALL insurances, as well as, employee health and welfare benefits WILL realize a reduction in expense
because of the larger volume; other expenses such as food, electric, fleet maintenance and office supplies are examples of expenses that
are reduced due to Inperium’s greater scaled buying power.
Q. How will this proposed affiliation better the lives of the individuals and families of those we serve?
A. THEY CAN FEEL MORE SECURE – by offering sustainability your programs remain intact, in addition, they are insulated from changing
economic challenges while other granular benefits are produce resulting in more satisfied & committed staff boosting morale & improving
the lives of those we serve.
Q. What are some of the financial benefits that can be expected from affiliation?
A. COST SAVINGS - refinanced debt can achieve more favorable payment terms; reduction in expenses for all insurances; leveraged
purchasing; systems enhancements and cost reductions to time and attendance, payroll, telecommunications platforms name a few of the
many that exist.
QUESTION & ANSWER
Q. What are the financial risks, in your experience, that an affiliate should be aware of?
A. NONE - we have found that through affiliation there is an immediate opportunity for improved financial position/condition & access to
additional capital. The access to our Obligated Credit Group allows each affiliate use of its Master Trust Indenture arrangement to provide
access to capital & financial resources that are flexible, done by ease of transfers, accommodates growth/development & is offered at greatly
reduced lending rates through bank, non-bank & other capital provider solutions.
Q. How is the proposed corporate structured represented to the public and/or press?
A. AS MAKING SENSE FOR ALL - in exchange for sharing governance, which is customizable, along with the integration of systems and staff
into IMS and through the use of Shared Service and Employee Agreements the affiliate can benefit from all aspects of affiliation while
retaining their own identity and mission. The Affiliate ultimately determines how they desire the relationship to be communicated to the
public and/or press. In some instances an Affiliate will have their communications read that the entity is now an affiliate of Inperium, while
others do not choose to state this publically.
Q. Are Mergers, Acquisitions OR Affiliations (MAA) a business strategy, approach, or something else?A. IT IS A TOOL & TACTIC- that supports an overall Corporate strategy with an objective of creating a Market Leader in the industry with sufficient size & voice to have a substantial impact on the consumers served & the community at large as well as wealth creation; MAA is generally considered one tactic by which these objectives can be achieved BUT in the nonprofit MAA process this is the exception to the rule in that it can also be a strategy because nonprofit MAA routinely results in substantial and instantaneous market standing, breadth of consumer impacts & wealth creation by the target & the sole member & essentially the deal itself, not the aftermath of the deal, create all of these in nonprofit MAA.
QUESTION & ANSWER
Q. Realizing that the Affiliate would continue to exist as a corporation, can you outline what the role of the Affiliate board would be once
the affiliation was finalized?
A. THE SAME AS IT HAS PRE-AFFILIATION - the Affiliate board would remain intact as it is today and continue to meet at the frequency it
chooses and continue the committees it has established or others it wished to create; once we satisfy the minimally required Reserved Powers
in accordance with the bylaws, corporate law and other considerations – all the other matters are decided by the Affiliate Board. Inperium
offers synergy opportunities to allow the affiliate the ability to continue its governance, operations and further its mission without undue
interference from Inperium.
Q. Will key OPERATIONAL decisions rest with the Affiliate Board?
A. YES - THEY WILL – decisions are dependent upon what the Affiliate Board is comfortable with as it relates to the specific concerns and how
the Board chooses to align with the reserved powers. Aside from the required reserved powers, it is up to the Executive (CEO) and Board of the
Affiliate to determine what decisions they want to retain standing over, for how long, and under what arrangements working in agreement
with Inperium.
Q. What are some examples of typical decisions reserved for the Inperium Board?
A. SPECIFIED GOVERNANCE AS DEFINED IN THE BYLAWS - the Inperium Board, consisting of Directors from the Affiliate(s) Board, can approve
the removal of a Director for failure to adhere to the bylaws & make other assignment of members/terms, amendments to the bylaws and
commitment of long term debt, are a few of the examples of the basis decisions that “can” occur at the Inperium Board level, these areas are
all prescribed on the definitive agreement and bylaws.
Q. After hearing all about Inperium and the model that supports its affiliates, tell me what I would regret in five to ten years if I/we decided
not to affiliate with Inperium?
A. Standing alone in a constantly changing service environment that is impacted by a multitude of variables and system wind changes lessens
our ability to take desired chances/strategies and sustain operations during lasting sine wave lows without compromising quality. Partnering
with other like-minded and high quality organizations adds a level of confidence that cannot be measured. Our organizational diversity makes
QUESTION & ANSWER
Q. If an Affiliate is losing money, but represented a service considered key to the Affiliate’s mission, how would the decision/process of
whether or not to continue the service be reached in the new structure?
A. WE BELIEVE IT WOULD BE THE SAME - all Boards have a legal fiduciary responsibility to take action in these instances, an affiliation with
Inperium does not change the process about considering discontinuance of a service or program by the Affiliate except in grave financial
circumstances where inaction at the local level would breach fiduciary duty.
Q. How will the affiliation create impacts to our services quality?
A. YOUR FOCUS CAN BE ON PROGRAMMING - we enhance affiliate services quality by offering support in areas of non-programmatic, and programmatic if desired, operations that allows for less distractions & offers opportunities for a greater focus on quality by the staff and management of the affiliate.
Q. Can you describe what issues of culture merger or conflict you’ve experienced between agencies in your organization to date and how
you have handled these issues?
A. THERE IS NO CONFLICT IF THERE IS NO MERGER - we have had positive experiences with the prior affiliations under our Constellation;
the culture of the Affiliate remains their culture, the systems and services behind the scenes will change but, the overall process is very
discrete to most all involved unless otherwise elected by the Executive to be more visible based on the Affiliates individualized desires.
Q. How will the affiliation benefit our employees?
A. THEY TOO CAN FEEL MORE SECURE - you will have a better and more effective workforce as there will be improved morale and the
opportunity to pay staff higher wages 6-12 months post affiliation; offers advancement for staff through Inperium and allows for senior
leadership to move into a role with Inperium while moving staff at the Affiliate into a higher role.
QUESTION & ANSWER
Q. After hearing all about Inperium and the model that supports its affiliates, tell me what I would regret in five to ten years if I/we decided
not to affiliate with Inperium?
A. Standing alone in a constantly changing service environment that is impacted by a multitude of variables and system wind changes lessens
our ability to take desired chances/strategies and sustain operations during lasting sine wave lows without compromising quality. Partnering
with other like-minded and high quality organizations adds a level of confidence that cannot be measured. Our organizational diversity makes
us strong and resilient.
QUESTION & ANSWER
Commonly Asked Questions
& the Answers
Pennsylvania (PA) Member Registration
Q. Does affiliating with a PA Parent, rather than a parent registered in my state, increase any of the regulatory or tax filings we must make? A. THERE ARE NO ADDITIONAL FILINGS. Except that in some states you might be required to make a filing that discloses the affiliation & you will continue to make the same governmental filings that you are currently making.
Q. If we affiliate with a PA Parent will we be required to comply with PA’s audit, fundraising, or conflict of interest requirements in addition to those in our state? A. NO. For fundraising in your own state, you will not be required to comply with any of Pennsylvania’s audit, fundraising, or conflict of interest rules. You will need to continue to comply with all applicable requirements of your state.
Q. Does affiliating with a PA parent offer any advantages that we will not obtain by affiliating with a Parent in our state? A. YES. You will have access to the programs, services, and talents of Inperium’s other affiliates in PA & you may have access to grants & fundraising sources in PA to which you will not have access if you affiliate with a non-Pennsylvania Parent.
Q. Will the PA Attorney General need to review and approve the affiliation even though we are not located in Pennsylvania? A. NO. The PA Attorney General is only responsible for the charitable assets of not for profit entities registered in PA. The Attorney General or other governmental agency of your state may need to review & approve the affiliation regardless of the state in which the Parent is registered.
Q. Why does Inperium have separately incorporated entities in some states but unincorporated divisions in other states? A. YES & NO. In some states regulations either require it/or make it more efficient for Inperium to do business through a legal entity incorporated in that state. In other states, there is no advantage to forming an incorporated division.
Q. Do we lose anything by not affiliating with a Parent registered in our own state?A. NO. There is no difference relating to governance, revenue sources, or regulatory requirements. Aside from the advantages shared above you will not be affected by the state in which your Parent is registered.
QUESTION & ANSWER
What Others Know & SayQuotes
In Their Own Words
“As the anchor legacy affiliate, Supportive Concepts has derived tremendous benefit from the diverse partnerships thatconnect to the Inperium constellation. Each new affiliate brings new ideas, methods, & new opportunity. Ultimately themen and women we serve and the staff who support them experience these benefits.“ - Fred Lokuta, CEO
“The affiliation for The Children’s Home of Reading has resulted in the creation of many newopportunities. Our mission has gone unchanged and affiliation has resulted in more and morechildren being served as new programming opportunities are endless.” – Dr. Vince LaSorsa, CEO
“SJBHR affiliation with Inperium has secured our mission , values and goals , assuring thefuture of behavioral health services for our most vulnerable citizens.” - Terri Wilson, CEO
“The great thing about Wake Enterprises joining the Inperiumconstellation is we are who we were, only stronger!” - Walter Weeks, CEO
Edison Court struggled to expand programming outside of our home County for many years. As a result of affiliation, wewere able to access financing to expand our services into Lehigh County within 2 months of closing. We’ve begun todevelop new community-based options in Lehigh County and we are on the verge of doing so in Berks County. Withoutour relationship with Inperium, I’m convinced we would not have been able to pursue these growth opportunities, whichallowed us to increase our revenue 26% in the first year following affiliation. – Kristin DeForest, Executive Director
“I have studied and experienced firsthand, the Inperium affiliation model & have observed the process used in thesharing of resources and services & have seen how this model translates to highly increased efficiencies & costsavings that can then be put back into each programs' strategy to further it's individual mission & vision. From theperspective of a former government official, the Inperium model is everything it claims & more. It is a truecollaboration from start to finish.” - Beverly Mackereth, Former Secretary for PA Department of Human Services
Progressive IllustrationsThe Inperium Fireworks Display
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