Network Models for Integrated
Care Partnerships
M. Crystal Lowe, M.S.W
Executive Director
PA Association of Area Agencies on Aging
It’s a Journey
Pennsylvania’s Story
• An opportunity arose that encouraged AAAs to work
together; working toward mutual benefits.
• Organizations were willing to step forward to serve
as the lead contractors.
• The work gave partnering organizations a “toe” into
an entrepreneurial environment.
Network Structure
VA Medical Center Catchment Area
ERIE
WARREN
McKEAN
900
CRAWFORD
2,500
FOREST
100
MERCER
100
2,300
700
LAWRENCE
BUTLER
2,100
CLEARFIELD
2,000
BEAVER
500
400
250
2,700
CAMBRIA
ALLEGHENY
3,200
100
BLAIR
200
250
WESTMORELAND
700
FAYETTE
1,300
300
BERKS
LEBANON
600
600
FULTON
1,000
SOMERSET
300
FRANKLIN
100
NORTHAMPTON
3,000
ADAMS
YORK
LEHIGH
3,100
900
DAUPHIN
3,100
CUMBERLAND 5,300
BEDFORD
2,500
2,500
HUNTINGDON
WASHINGTON
400
GREENE
CARBON
850
NORTHUMBERLAND
200
SNYDER
SCHUYLKILL
MIFFLIN
700
JUNIATA
100
100
PERRY
1,500
MONROE
1,300
MONTOUR
300 200
COLUMBIA
UNION
CENTRE
ARMSTRONG
250
INDIANA 800
PIKE
450
LUZERNE
1,100
1,500
1,300
3,700
CLINTON
JEFFERSON
1,100
LACKAWANNA
SULLIVAN
LYCOMING
2,100
200
CLARION
800
700
500
WYOMING
CAMERON
800
WAYNE
200
1,300
ELK
900
SUSQUEHANNA
BRADFORD
TIOGA
100
VENANGO
200
POTTER
800
LANCASTER
800
400
BUCKS
4,000
MONTGOMERY
300 4,000
CHESTER
4,500
Philadelphia
C-1,200
DELAWARE
3,000
120
600
3,000
L-100
Business Roles
Memorandum of Understanding
• Receiving referrals
• Reporting
– Data
– Invoices
• Interfacing with the Fiscal Management Agency
• Communicating with the VA Medical Staff on clinical
issues
• Providing Quality Assurance
Other Possibilities Made Us Evaluate
Our Structural Options
Additional Options
1.
2.
3.
4.
5.
6.
Unincorporated Business Association
C - Corporation
S - Corporation
Non-profit Corporation (501(c)(3))
Limited Liability Company
Management Service Organization (MSO)
© 2014, SOGT, LLC
Caveat Emptor
This is Not Legal Advice
Unincorporated Business
Association
1. Unincorporated association consisting of
three or more members joined by mutual
consent for a common purpose. (not a
partnership).
– Has separate legal standing, but there is
potential personal liability to members.
C - Corporation
2. Subject to double taxation
a. Profits taxed at the corporate level
b. Rates 15% to 35%
c. For-profit entities will pay additional
tax on distributions/income when
received.
© 2014, SOGT, LLC
S - Corporation
3. Subchapter S Corp. – no corporate level
tax, but many limitations.
a.
b.
c.
d.
Limitation on who can be a shareholder:
Individuals or other S corps; qualified subchapter;
S trusts (QSST) or a 501(c)(3) corporation. Any other
for-profit entity is not permitted to be a shareholder.
Profits and losses must be allocated proportionately to
each shareholder’s interest in the company.
May only have one class of stock.
May not have more than 100 shareholders.
© 2014, SOGT, LLC
Non-Profit Corporation –
501(c)(3) Public Charity
4. To be tax-exempt under Section 501(c)(3) of the
Internal Revenue Code, the organization must
be organized and operated exclusively for
exempt purposes set forth in Section 501(c)(3),
and none of its earning may inure to the benefit
of any private shareholder or individual.
Thus, the 501(c)(3) organization could only be
used to contract with an MCO if all of its
members are 501(c)(3) corporations.
© 2014, SOGT, LLC
Limited Liability Company
5.
Very flexible form of entity. No limitation on who can be
members, capital, distributions or management.
Terminology is different – but can be set up the same
a corporation (but doesn’t have to be).
Corp. (required)
Shareholders
Directors
Officers:
President,
Secretary
Treasurer,
Other)
© 2014, SOGT, LLC
LLC
Members
Managers (not required)
Officers (not required, but
recommended)
as
Limited Liability Company (cont’d)
•
Taxed as a partnership.
•
No entity level tax; pass through entity. All
profits and losses pass through to members.
Can be pro rata based on ownership interests,
but doesn’t have to be.
© 2014, SOGT, LLC
Limited Liability Company
Operating Agreement (cont’d)
•
•
Voting thresholds (majority (50%), super-majority
(70%?), unanimous)
Fundamental transactions (require higher voting
threshold; i.e. super-majority or unanimous)
- buy/sell real estate
- admit new members
- enter lease
- capital expenditures in
- borrow money
excess of $______
- pledge assets
- distribution/salaries
- capital call
- other
- dissolution/bankruptcy
- sell assets
(except in ordinary course/
merger/consolidation/division)
© 2014, SOGT, LLC
Limited Liability Company
Operating Agreement (cont’d)
•
Territories, non-compete, non-solicitation,
confidentiality, inventions, indemnity
•
Anti-trust; anti-competition issues
•
Transfers or withdraw (dissociation)
© 2014, SOGT, LLC
The TRUE Courage is Facing Danger
When You are Afraid
Management Service Organization
6. Defined: An entity that under contract provides services
such as facility, equipment, staffing, contract negotiation,
administration or marketing.
•
MSO’s are most commonly known for providing
management and administrative services to groups of
physician practices or between physician practices and
hospitals or health systems.
•
Such organizations can alleviate the administrative burden
on the organization (s) and allow them to take advantage
of economies of scale and group buying power when
negotiating
© 2014, SOGT, LLC
Management Service Organization
(cont’d)
with “integrated care” organizations.
•
An MSO performs certain administrative functions
and can contracts with “integrated care
organizations” on behalf of an individual agency or
on a group-wide basis.
•
An MSO, however, is not an entity. It is simply a
“buzz word” that has been used to describe
entities performing these functions.
© 2014, SOGT, LLC
Lessons Learned
More Lessons
• It takes more money and time than you
expect.
• The work is not for the faint of heart, but
has opportunity for big payoffs for your
organization.
• Clarity of expectations is key.
• And, Both
“You’ve always had the power, you just
needed to learn it for yourself”