Program Update

1. Program Update Karol Swartzlander ADRC Program Director California Health and Human Services Agency ADRC Financial Planning Model Webinar February 6, 2014

2. Agenda • Welcome & Introductions • Background • Introduction of ADRC Financial Planning Models • Michael Priniski, Mercer • Terri Sult, Chi Partners (in collaboration with Sac State Univ.) • Q & A

3. Consultant Teams • Mercer (The Scan Foundation Funding, San Diego and Nevada ADRCs) • Michele Walker, MSG, MPA • Mary Sowers, BA • Mike Priniski, CPA • Sacramento State University, College of Continuing Education(CMS Grant Funding, Alameda ADRC) • Deborah Hunt, PhD • Lindle Hatton, PhD • Terri Sult, MBA

4. Background • California is undergoing a system transformation for the delivery of Medi-Cal benefits statewide • California’s No Wrong Door ADRC Model: Core partnership between AAA and ILC and then other LTSS network providers • ADRC partnerships are well positioned within their communities to play a vital role in this transformation • Unparalleled knowledge of the complex service delivery system • Track record of helping individuals understand their options and choices available in the community, including Medicare, Medicaid, Veterans Affairs, and other public and private LTSS delivery systems

5. Background • Local organizations indicated they needed technical assistance and tools to engage in the changing market place • In May 2013, released a ADRC service cost tool developed by Peggy O'Brien-Strain of Mission Analytics Group, Inc. • adapted from a cost/budget tool created by Tom Duke, Budget Manager for the County of San Diego, Aging and Independence Services

6. Purpose of ADRC Financial Models • Designed to help AAAs, ILCs, and other ADRC partners develop financial projections for business planning purposes • Tools can be used evaluate the financial viability of specific programs or services, develop cost estimates to inform pricing discussions with potential funders, develop staffing plans, and/or provide estimates of the amount of reserves needed to cover losses while in the planning or ramp-up phase of new services or products.

7. Comparing ADRC Financial Models Mercer: Model A • General budgeting & financial viability model • Yearly • 5 years • FTE – ADRC as a whole • Inflates Services • Service cost tool Sacramento State: Model B • More detailed budgeting & financial viability model • Monthly • 3 years • FTE allocation by multiple services • Inflates Services & Revenue • Service cost tool

8. Tools and Resources California ADRC Website http://communitychoices.info The Scan Foundation http://www.thescanfoundation.org/community-based-organizations

9. Government Human Services Consulting ADRC Mercer Business Model February 6, 2014

10. Project Goal: Establish a replicable business model for Aging and Disability Resource Connection (ADRC) partner organizations focused on the purchase of integrated long-term services and supports (LTSS) by managed care and other potential buyers.

11. Mercer Business Model The business model provides an overview on how the ADRC partnerships plan to operate, deliver value to customers, and how it will remain financially viable The business model was developed in conjunction between Mercer and 2 ADRCs It will help determine the revenue needed to break even as a sustainable ADRC without subsidies from other programs

12. Mercer Business Model • Given the potential differences in ADRC systems, the model was constructed to be adapted accordingly • The business model also needed to reflect the ADRC underpinnings, has built in some logic to remind partners to engage in critical analysis of business opportunities to ensure congruence with core values/core functions • The model takes into account the budgeting needed for measuring financial viability and sustainability to help ADRCs make strong business decisions

13. Mercer Business Model • The key components that were asked during the business model development are: • Who are the key partners of the ADRC? • What are the key activities of the ADRC? • What are the key resources of the ADRC? • Who/what are the ADRC customer segments, how to enhance the customer services, and what are the channels to address customer needs? • What value does the ADRC bring to customers/contractors?

14. Mercer Business Model • Components of the business model that projects up to 5 years includes: • Grants and Contributions • Other Current • Contracted Services • Agency Staff • General Administration • Sellable Services

15. Sacramento State UniversityADRC Financial Model Presented by: Terri Sult, MBA February 6, 2014

16. Purpose of the Model • To help ADRC partners develop financial projections • To assess the financial viability of specific programs or services • To develop cost estimates to inform pricing discussions with managed care plans or other funders • To provide estimates of reserves needed to cover losses associated with implementing new products or services

17. Using the Model • Enter service volume assumptions: • The projected volume for each type of service • The anticipated start date for each service • Non-service-specific grant funds • Enter staffing assumptions: • Position titles and salaries • # of FTEs utilized for each service • % benefits and annual inflation factor

18. Using the Model • Enter direct cost assumptions for each service • Select an indirect allocation / overhead method • The model will then generate total estimated costs for each service • Enter revenue assumptions: • Per-unit or total revenue for each service

19. Using the Model • The model will generate financial projections: • For each service on a monthly basis for 3 years • With detail by service for volume, revenue, staffing, non-labor costs and net-operating income/loss • Showing the total projected net income / loss • Modify assumptions to test different scenarios

20. Presenter Contact Information Karol Swartzlander karol.swartzlander@chhs.ca.gov Michael Priniski michael.priniski@mercer.com Terri Sult terris@chipartners.net