2. Proposal: Establish for-profit PACE center in Nashville to
provide comprehensive care to 55+ population needing long
term support services
CAPITAL REQUIREMENTS SEEKING
80% Funding (20% already secured)
Synergy with:
• Established local HC network
• Insurer with local MC population
BENEFITS
6 year ROI – 153%
Expandable to other markets
Building $741,000
Equipment/Vans $880,000
Solvency Reserves $1,055,000
Working Capital $2,752,000
Total $5,427,000
4. PACE - Nashville
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
Program of All-Inclusive Care for the Elderly
• CMS – Supported program, developed in 1970s
• First Medicare/ Medicaid waivers issued in 1990
• Became permanent recognized provider type for
Medicare/ Medicaid in 1997
• CMS removes non-profit ownership restriction in 2015
PACE - Nashville
• Will deliver all needed medical and supportive services
for participants
• Primary care – adult day care – home health and social
services – hospital and nursing – targeted interventions
5. Value Proposition to Participant
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
“Live where you want, longer, safer,
better.”
• Will provide high-quality care in a more
desirable setting at a lower cost that current
nursing home-based
• Assuming full risk, PACE- Nashville will be
unfettered by Medicare/ Medicaid restrictions
on long-term care services and can deliver
targeted, proactive care, and non-medical
interventions in a highly customized fashion.
6. Value Proposition to Investors
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
• Gain experience in geriatric population health through a
proven model of care
• Opportunity to co-develop and scale PACE in multiple
markets to lower cost, improve experience and increase
options for enrollees
• Effectively manage the care of Dual-eligible population
in managed care program
United Healthcare
• Develop partnerships to reduce risk in transition to VBP
environment, HRRP Initiatives, Payment bundling
• Opportunity to scale program to multiple markets
• Community impact in Nashville
Hospital Corporation of America
7. Mission Statements
PACE -
Nashville
UHC
Our mission is to help people live
healthier lives and to help make the
health system work better for
everyone.
HCA
Above all else, we are committed to
the care and improvement of human
life. In recognition of this commitment,
we will strive to deliver high quality,
cost-effective healthcare in the
communities we serve.
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
9. Key Success Factors
Sufficient Demand
Less Long-Term Care Competitors
Strong State Support
Adequate Capitation Rates
Adequate Startup Capitalization
Strong Clinical and Financial Risk Management Strategies
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
10. Competitive Advantages
Treatment model coordinates complex care – no dropped balls
Capitated payments incentivizes cost effective care
Demonstrated value – higher quality care at lower cost
Proven track record at maintaining participant independence
Price and quality transparency
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
13. PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
$3,330,543
$1,283,342
$314,544
$159,320
$770,545
$2,070,416
1
PACE – Nashville: End of Year Cash on Hand
Startup Year 1 Year 2 Year 3 Year 4 Year 5
14. Target Market & Program
Size Estimate
• Davidson County only
• Target Market = Medicare+LTSS
• CMS+TennCare data
• Program Size:
• Market Penetration Estimates
• FBDE – 20%
• Others – 10%
• Geographic Limitations – 10 mile
Radius
• Market Segments
• Families/Participants
• Discharge Planners
• Geriatricians
• AAAD
64,000
Medicare
11,021
Total LTSS
population
1314
(Penetration
Losses)
825
(location
limits)
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
15. Marketing/Sales Strategy
• Direct to consumers:
• “You shouldn’t have to choose between your home and your health”
• Outdoor Advertisements: Transport Vans, EOB Paperwork
• Acute facility discharge planners:
• “One stop shop for all inclusive care without being tied to a facility”
• Building relationships via Direct Outreach by Sales and Marketing Coordinator
• Other geriatric referral sources:
• Primary Care, Area Agency on Aging and Disabilities, and Tennessee’s
Medicaid program
• “Value of a nationally validated model of care designed for this population”
• Building relationships via Direct Outreach by Sales and Marketing Coordinator
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
16. Performance Metrics – Balanced Scorecard
Marketing
New Starts
Telephone Contacts
Conversion Rate
Referral Source
Quality Care/Satisfaction
Hospital Admission Rate
30 Day Readmission Rate
% Nursing Home Days
Disenrollment Rate
Financial
Days in AR
Days Cash on Hand
Operating Expenses per
Participant
Operating Margin
Human Resources
Staff Turnover Rate
Staff Satisfaction Score
Contract Hours
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
17. Time
(months)
Objectives
12 60 Enrollees
24 98% success rate at preventing nursing home admissions
Superior healthcare outcomes (Hospital readmission rate,
LOS, immunization rates) compared to usual care
30 Financial break even
36 150 enrollees
60 Two centers serving 250 to 300 enrollees
Revenue of 15 million dollars with 10% margin
Expanded program open to private-pay participants
Goal
Over a three-year period, PACE-Nashville will establish itself as the premier
source of all-inclusive care for our target population, those 55+ in need of
nursing home services who could safely remain at home with home and
community based services.
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
18. • Expand Program
• Internal Funding
• Venture Capital
• Sale
• Liquidate
Long Term Exit Strategy
• Free Operating Cash Flow -
$13.7million/ROI – 153%
• Growth Rate – 3%
• Cost of Capital – 6.58%
• Beta – 0.92
• EBITDA multiples – 12-15 million
Valuation @ 6 Years
19. Proposal: Establish for-profit PACE center in Nashville to
provide comprehensive care to 55+ population needing long
term support services
CAPITAL REQUIREMENTS SEEKING
80% Funding (20% already secured)
Synergy with:
• Established local HC network
• Insurer with local MC population
BENEFITS
6 year ROI – 153%
Expandable to other markets
Building $741,000
Equipment/Vans $880,000
Solvency Reserves $1,055,000
Working Capital $2,752,000
Total $5,427,000
20. Appendices
• LTSS Spending for HCBS by State Map
• Challenges
• NPA Pro Forma Model
• Start-Up Cost Assumptions
• Budget/Enrollment
• Summary P&L
• Summary Cash Flow
• Summary BS
• Volume Projections
• Effect of Growth Rate on NPV
• PESTLE Analysis
23. NPA High Level Financial Pro Forma Model
Developed in 2003 immediately following PACE Expansion Initiative funded by grants from
Robert Wood Johnson and John A. Hartford Foundations.
At that time, only 26 PACE programs existed. Currently there are 115 in 32 States, all of which
are NPA members.
Model generates pro forma financials based on assumptions input schedule and presents a
baseline start-up scenario.
Assumptions based on experiences with current operational PACE programs.
Capitated revenue reflect actual Medicare/Medicaid by selected county.
Expense assumptions reflect national median estimates derived from current operational
PACE programs.
PACE Value Prop Desc and Miss Mkt Trends Success Factors Competitive Edge Financial Marketing Performance Metrics
24. Start-Up Costs – Assumptions
NPA Guidelines
• PACE center lease $10 to $15 per sq. ft.
• Typical Size 10,000 to 12,000 sq. ft.
• Renovation Costs of $45 to $55 per sq. ft.
• Hardware/Software/EHR - $450,000.
• Equipment Purchases at $650 to $850 per
enrollee = $200,000.
• Vans at $60,000 New, $40,000 Used.
• Solvency Reserves of $500,000 to $750,000.
PACE – Nashville
• Lease of $22 per sq. ft.
• Building size 13,000 sq. ft.
• Renovations of $57 per sq. ft.
• $450,000.
• Equipment Purchases of $130,000 ($850 x 153
enrollees).
• Vans All New (5 total).
• Solvency Reserves of $1,000,000.
25. NPA Guideline PACE - Nashville PACE - Chattanooga (Alexian Bros.)
Budget $1.5 - $5.6 mil $5.4 mil ('15) $3.5 mil ('98)
Initial Enrollment 6 to 9 7 8
Average Monthly Net 3 to 5 3 to 5 6.8 to 8.6 (actual)
End of Year
1 - 57 101 (actual)
2 - 105 224 (actual)
5 up to 300 225 -
BUDGET AND ENROLLMENT
26. SUMMARY DEPARTMENTAL PROFIT & LOSS STATEMENT
STARTUP YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CY 2015-16 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021
ENROLLMENT
Year End Enrollment 57 105 153 189 225
Average Daily Enrollment 29 83 131 173 199
Member Months 352 996 1,572 2,070 2,385
ATTENDANCE
Year End Daily Attendance 28 52 77 95 100
Average Daily Attendance 15 42 66 86 99
Attendance Days 3,813 10,790 17,030 22,425 25,838
REVENUES
Medicare $0 $893,043 $2,694,054 $4,315,812 $5,765,872 $6,747,754
Medicaid 0 1,095,439 3,128,828 4,988,418 6,633,866 7,720,328
Total Revenues 0 1,988,482 5,822,882 9,304,230 12,399,738 14,468,082
EXPENSES
Transportation 0 144,958 311,543 483,603 613,304 714,264
Meals 0 47,875 145,041 202,056 255,727 283,771
Social Services 4,075 116,224 190,045 266,668 329,224 388,126
Therapy 0 133,352 332,139 371,918 511,252 534,679
PACE Adult Day Center 28,625 249,358 359,712 495,079 560,010 632,809
Home Care 6,102 243,266 478,472 783,530 959,298 1,094,369
Pharmacy 0 237,536 692,283 1,125,419 1,526,403 1,811,442
PACE Center Primary Care 49,988 461,087 623,100 800,479 994,475 1,020,456
Outpatient Specialist 0 69,778 276,607 446,968 595,886 703,332
Labs and Diagnostics 0 17,445 50,347 81,053 108,865 127,940
Nursing Home 0 87,120 364,690 766,913 1,267,491 1,762,985
Hospital 0 211,370 547,947 782,164 983,414 1,076,829
Housing 0 27,254 78,658 126,630 170,081 199,882
Administrative 494,776 805,396 1,001,179 1,355,538 1,571,889 1,693,848
Marketing 51,673 149,628 152,620 155,673 158,786 161,962
Insurance 5,250 53,593 92,882 128,105 158,661 178,250
Facility 77,000 314,160 320,443 326,852 333,389 340,057
Pastoral Care 0 15,033 15,333 15,640 15,953 16,272
DME/Supplies 0 29,884 86,248 138,849 186,494 219,170
Depreciation 0 198,933 210,933 228,933 243,933 257,933
Interest 0 0 0 0 0 0
Total Expenses 717,489 3,613,249 6,330,225 9,082,071 11,544,535 13,218,376
Net Income (Loss) -717,489 -1,624,767 -507,343 222,159 855,203 1,249,706
27. STATEMENT OF CASH FLOWS
STARTUP YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CY 2015-16 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021
OPERATING ACTIVITIES
Increase (decrease) in net assets ($717,489) ($1,624,767) ($507,343) $222,159 $855,203 $1,249,706
Add back non-cash Items:
Depreciation & Amortization 0 198,933 210,933 228,933 243,933 257,933
Changes in operating assets and liabilities:
Accounts receivable 0 -317,103 -288,760 -287,692 -225,390 -78,233
Accounts payable 61,486 129,827 139,197 148,988 131,158 61,443
Cash Reserve 0 (434,091) (402,825) (407,612) (333,679) (130,978)
Cash from operating activities -656,003 -2,047,201 -848,798 -95,224 671,225 1,359,871
INVESTING ACTIVITIES
Acquisition of buildings, equipment, and vans -1,441,000 0 -120,000 -60,000 -60,000 -60,000
Cash from investing activities -1,441,000 0 -120,000 -60,000 -60,000 -60,000
FINANCING ACTIVITIES
Ownership Contribution 5,427,546 0 0
Repayments of long term debt 0 0 0 0 0 0
Cash from financing activities 5,427,546 0 0 0 0 0
Net increase (decrease) in cash 3,330,543 -2,047,201 -968,798 -155,224 611,225 1,299,871
Cash, beginning of year 0 3,330,543 1,283,342 314,544 159,320 770,545
Cash, end of year 3,330,543 1,283,342 314,544 159,320 770,545 2,070,416
28. BALANCE SHEET - PACE Nashville
Years Ending December 31 FUNDING STARTUP YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CY 2015-16 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021
ASSETS
Current:
Cash 5,427,546 $3,330,543 1,283,342 314,544 159,320 $770,545 $2,070,416
Cash reserve 0 434,091 836,916 1,244,528 1,578,206 1,709,184
Accounts receivable 0 317,103 605,864 893,556 1,118,946 1,197,179
Total current assets 0 2,034,536 1,757,324 2,297,404 3,467,697 4,976,779
Fixed:
Buildings and equipment,net 1,441,000 1,242,067 1,151,133 982,200 798,267 600,333
1,242,067 1,151,133 982,200 798,267 600,333
Total assets 4,771,543 3,276,603 2,908,457 3,279,604 4,265,964 5,577,112
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable 61,486 191,313 330,510 479,498 610,655 672,099
Long term debt 0 0 0 0 0 0
Total Liabilities 61,486 191,313 330,510 479,498 610,655 672,099
Net Assets:
Net assets - beginning of the period 5,427,546 5,427,546 4,710,057 3,085,290 2,577,947 2,800,106 3,655,309
Net income (loss) 0 -717,489 -1,624,767 -507,343 222,159 855,203 1,249,706
Paid-In Capital 5,427,546 5,427,546 5,427,546 5,427,546 5,427,546 5,427,546 5,427,546
Retained Earnings 0 -717,489 -2,342,256 -2,849,599 -2,627,440 -1,772,237 -522,531
Shareholder Equity 5,427,546 4,710,057 3,085,290 2,577,947 2,800,106 3,655,309 4,905,015
Total Liabilities and Shareholder Equity 4,771,543 3,276,603 2,908,457 3,279,604 4,265,964 5,577,114
29. Volume Projections
0
50
100
150
200
250
300
350
0 2 4 6 8 10 12 14 16 18 20
Volume
Quarter
Projected Volumes PACE-Nashville
Baseline Best Case Worst Case Conservative FP Estimates
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Enrollment 7
Monthly net Enrollment 5 4 4 3 3
End of Year Enrollment 62 110 158 194 230
31. Environmental
- Davidson County Growth
Political
- Need to address cost of health
care
- Medicaid budget considerations
- Pushback from Nursing Home
Association/Managed Care
providers
Economic
- Risk-based care/population
health
- Reduced reimbursement
- Drug costs for new meds
- Hospital costs
- Price and Quality Transparency
Social
- Aging population/Baby Boomers –
80% increase in >60 population
by 2040
- Two worker families (no caretaker
at home)
- Desire to remain at home in
elderly
Technological
- Home monitoring devices
- Communications devices
- Healthcare analytics
- EHR development
Legal
- CMS regulations
- Quality Metrics
- Advertising regulations
- PACE regulations
- TennCare regulations
PACE -
Nashville
PESTLE Analysis
