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cliftonlarsonallen.com
See CLA PowerPoint User Guide for instructions to insert an image or change the icon on the business card. Find it at the bottom of the myCLA / Firm Resources / Materials / Templates page.
Continuing Care at Home Evolution, Innovation & Opportunity
LeadingAge Arizona May 30, 2013
Presented by:
Rachel B. Cohen, Director
Chad Kunze, CPA Partner
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Why Consider Community Based Services?
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According to the CDC by 2050, an estimated 27 million
people will need long term care with the majority
opting to receive care in their home.
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Housing and Health Care Is Ever Evolving
Source: Adapted from previous Greystone and CliftonLarsonAllen LLP presentations
Today’s Spectrum of Services
Community Based
Services
Wellness Programs
Senior Membership
Geriatric Assessment
Case/Disease Management
Health & Wellness
Centers
Independent Living
Intentional Community
Personal Care Assistance
Assisted Living
Telehealth & Home
Technologies
Day Care
Medical Social
Home Health
Skilled LTC
Respite Care
Palliative Care
Skilled Nursing Care
Hospice
Outpatient Therapies
Subacute Rehab
Diagnostic & Treatment
Center
Long Term Acute Hospitalization
Acute Hospitalization
Dementia Assisted
Living
Board & Care Intermediate Care
Want driven Need driven
Preventative Long-term care Hospital
Active adult communities Multi-level campuses
Housing w/ Services
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Reformed Health System – Service Delivery
Primary Care
Wellness
Acute Care
Chronic Care
• Hospital •SNF • At Home •Telehealth
•Home care •SNF •Assisted Living •Hospital •Physician office •Group visits •Self management • RN, Care Coach • Online/social networking (e.g. diabetes group) •Telehealth monitoring
•Health risk assessment • Independent senior
housing •Adult day programs •Community clinic
for vaccines • Local fitness center • Smoking cessation
program •Weight loss
program •Personal wellness
coach • Senior Center •Online social
networking groups/tools • Labs, diagnostics
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Source: CliftonLarsonAllen consumer telephone surveys 2008-2012
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Innovative Options
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Home Health
Home Care or Private Duty
Hospice
Adult Day Program
Home Maintenance
Services
Technology
Social, Educational and Spiritual
Assisted Living & Nursing
Home
CARE MANAGEMENT
Virtual Campus
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Care Coordination Is Expected To Save Costs
Source: Thorpe, Kenneth, PhD.; Emory University; “Estimated Federal Savings Associated w/ Care Coordination Models for Medicare-Medicaid Dual Eligibles; pgs 7 – 9; study supported by the America’s Health Insurance Plans; published 9/11; accessed via the web @ www.artoweradvisory.com
Care Coordination Assumes the following: 1. A team approach to services offered through Medicare & Medicaid 2. A whole person, person-centered approach 3. Care coordinator availability 24/7 4. Risk assessment & individualized care plan 5. Medication mgmt, adherence & reconciliation 6. Transitional care 7. Regular client contact 8. Health information exchange & electronic health record 9. Integration of primary and specialty physician care
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Continuing Care at Home
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Continuing Care at Home Models
• CCRC “without walls”
• Life care plan where members pre-pay for guarantee of future services
• Services typically are not health-related but long-term care services
• Focus on wellness and prevention
• Care Coordinator assigned to each Member
• Entrance fee plus monthly fees
• Most are regulated as CCRCs
• Admission only for independent seniors not in need of services (younger and healthier)
• Averaging 200-250 members
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CCaH Map Including Developing Programs
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CCAH Program Similarities
• Life Care – Guarantee of Future Service
• All are non-profit
• Based on Actuarial Studies
• Care Coordination
• Package of Services (not all packages are the same)
• One-Stop-Shopping Philosophy
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Program Differences
• Size
• Sponsors
• Services included in “package”
• Provision of services (employee or sub-contractor, network or only campus)
• Margin/Pricing
• Pricing Plans and Financial Risk
• Access to CCRC Campus amenities
• Portability
• Licensure
• Geographic reach
• Corporate Status
• Accounting methods, e.g. use of membership fees
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Typical Package of Services
• Care Coordination
• Home Inspections
• Annual Physical
• Access to Campus
• Fitness Center Membership
• Social & Educational Opportunities
• Emergency Response System
• Homemaker and Personal Care Services
• Home Nursing
• Live-in Services
• Meals
• Transportation
• Adult Day Program
• Assisted Living
• Nursing Home
• Referrals for home maintenance, housekeeping, lawn care, etc.
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Pricing & Contract
• Components of contract are similar to campus with additional language re: decision making and benefits caps.
• Average entrance fee ranges from $14,000 to $56,000
• Average monthly fee ranges from $200 to $500
• A variety of pricing plans including:
• 100% of all services paid as needed;
• a variety of co-pays for future services;
• home care only;
• long-term care insurance policy credit;
• limited total life-time benefit amount;
• refundable membership fee.
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Staffing – Continuing Care at Home Executive Director
Salesperson Care Coordinator
Sub-contracted Service Providers
Administrative Assistant
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Possible Financial benefit to Sponsoring CCRC*
Service Revenue Assisted Living $273,888 Nursing Home 375,998 Shared Services Fee 459,180 Occupational Therapy 9,518 Medicare Part A 257,250 Total Revenue to CCRC $1,375,834
*Example – Total of first five years of sample program
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Development Costs
Development costs are estimated at $100,000 (including market research, actuarial work and legal).
Initial operating investment estimated at $250,000 to $300,000 (with a payback schedule that can be achieved early).
Can cash flow itself as early as month 4 or 5.
According to GAAP rules for life care requiring the amortization of entry fees, can expect a positive bottom-line in year 3 or 4.
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“Permanent” Health Care Utilization
• Health Care Ratio =
(Perm AL Residents + Perm SN Residents)
(At Home Members + Perm AL + Perm SN)
– At Home Programs: 5-7%
– CCRCs: 18-20%
• Average age for need of permanent healthcare
– At Home Programs: 88.1
– CCRCs: 86.7
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Program Examples
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Revenue Sources 2009 Actual Revenue
Monthly Fees $1,178,328
Entrance Fees 440,677
Investment Income TOTAL REVENUE
57,560 1,676,565
TOTAL REVENUE $1,676,565
Operating 2009 Actual Expenses
Administration $301,477
Care Management 799,765
Marketing 381,322
Capital Costs 3,645
TOTAL EXPENSES $1,486209
Operating Year 5
Expenses
Revenues
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• First and largest program in the country
• Stand-alone non-profit – not sponsored by CCRC
• Located in greater Philadelphia and Delaware
• 2,300 members, average age at admission is 65
• Changed in 2004 – now only offers a Type B Modified Contract (similar to long-term care insurance)
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• Small entry fee of $3,500 for two years
• Monthly fees based upon benefits chosen, i.e. daily coverage, waiting period, lifetime maximum
• Less expensive option more appealing to a younger member
• Lower entry fee requires $1 million to $1.3 million in start-up capital
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Fee-for-service Model
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Fee-for-Service Models
• Fee-for-service options with small upfront membership fee, i.e. $1,000 to $5,000. Membership fee typically includes some services.
• Most are not licensed since there is no guarantee of care (sometimes licensed as home care provider).
• Limited care coordination is included. Extensive offered on a fee-for-service basis
• Target a senior who needs assistance now. • Parent organization typically supports as a loss leader –
serves as a feeder to fee-for-service offerings. • Cost to operate include one to two administrative staff,
marketing dollars and direct care staff (if applicable). • Capital investment and annual operating budgets vary greatly
based upon types of services offered.
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Sponsored by: Blakeford at Greenhills Retirement Community
Nashville, TN
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• Blakeford at Greenhills is a single-site CCRC.
• Wanted to develop continuing care at home without an entrance fee.
• Strategy to package care coordination and non-medical home care services to make aging at home easier and more successful.
• Refers to program as boutique program – serves wealthy seniors.
• Charged membership fee in the first year and then discontinued.
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• Retirement community services brought to you in your own home.
• At-home caregivers screened, trained and insured by Blakeford At Home.
• Chef-prepared meals, private transportation and more services all at home.
• Individual service plans custom-created for each family.
• Each family is assigned a care manager, masters level social worker or a registered nurse.
• Packages available such as Independent Living at Home for One; Assisted Living at Home for Two.
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Operating Performance
-$200,000
-$150,000
-$100,000
-$50,000
$0
$50,000
$100,000
$150,000
$200,000
As of
7/2008
As of
8/2009
As of
10/2010
Net Income
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Staffing
President (25%)
Marketing/Sales
Care Manager
Staffing Supervisor
Blakeford At Home
Board
Outside Service
Providers
Office Manager
Office Assistant
Full Time Caregivers
PRN Caregivers
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Lessons Learned
• At launch, sub-contracted all services except for care coordination.
• Developed non-medical home care agency and now enjoys margin.
• Initial operating support – estimated at $300,000.
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Challenges, Opportunities and Benefits
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Challenges
• Sales and Marketing - Successfully conveying the need for long-term care planning to the consumer and describing a complicated product
• Communicating benefits to campus residents
• Opening campus to at-home members
Opportunities
• Meet the needs of future generations who do not want to leave their homes.
• Increase brand awareness.
• Tap into an underserved market – 90 - 95% of older adults who choose not to live on a CCRC campus.
Challenges and Opportunities
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Financial Benefits
• Relatively low start-up costs and virtually no capital costs.
• Spread administrative costs over an additional program through shared services such as executive management, human resources, financial management, billing, accounts payable and receivable, etc.;
• Increased utilization/occupancy of assisted living and nursing home;
• Increased utilization/occupancy of nursing home for Medicare A short-term rehab stays;
• Rental payments for use of space and amenities; and • A small number of increased move-ins to independent
living.
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Questions?
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cliftonlarsonallen.com
twitter.com/ CLA_CPAs
facebook.com/ cliftonlarsonallen
linkedin.com/company/ cliftonlarsonallen
Rachel B. Cohen, MUP, MSW, Director (303) 455-2524
[email protected] Chad Kunze, CPA Partner (602) 604-3534