Senior Living Business: New ‘Superalliance’ Provides Added Synergy--

Two Neighboring Alliances Create Western Pennsylvania Alliance

August 1, 2008

Alliances of senior care facilities, looking to combine purchasing power and hold down operating costs, have been around for a decade or so. Now, two such alliances in western Pennsylvania have created a "super-alliance" to focus specifically on managed-care issues, purchasing power and educational programs.

Western Pennsylvania Alliance of Senior Services Providers (WPA) will represent 21 not-for-profit long-term care providers that currently belong to either the Healthcare Ventures Alliance (HVA) in Erie or Faith-Based Network (FBN) of Wexford (near Pittsburgh). In addition to new opportunities resulting from the umbrella organization, the two participating consortiums will continue their separate and successful therapy, insurance and pharmacy businesses that benefit the members of their individual organizations.

"Alliances started in the mid-1990s because of the threat of managed care," explained Michael Gallagher, executive director of HVA. "Now only about 15 alliances remain throughout the country." Alliance membership ranges from six facilities up to about 30.

Alliances can institute programs and entire businesses that individual members would find too expensive or too complicated or would require too many resources to do on their own. "The expertise of senior housing and health-care providers lies in housing, feeding and caring for people," said Gallagher. "They don’t necessarily have the expertise on staff to create businesses and to manage or maintain them. That’s where an alliance comes in. We’re doing what they would do on their own if they had the staff; instead, they’re doing it collaboratively with other organizations and receiving the same benefits in the end. Collaborating is a very prudent thing for not-for-profits to do for a variety of reasons. They can find and fund resources to help meet their missions, provide a better product and have better control over the outcomes."

Due to the current economic crunch, states are again looking at managed care with respect to Medicaid, which is a big payer when it comes to long-term care. The boards of HVA and FBN felt that if they collaborated to institute best practices and outcomes for their respective members, it would show the state government that they are the better providers and the better users of those dollars. Hence, the WPA was born. "We’re collecting data to prove our point," said Gallagher, "so our members can negotiate a decent price for the care that they provide."

HVA began in 1997, and the creation of a therapy company in 2001 is one of the alliance’s major accomplishments. "We partnered with an Illinois alliance that already had a successful therapy company," Gallagher said. "Today, we have a $10 million business with 209 employees. Having our own therapy company allows our members to offer better rehab programs, improve the outcomes, increase revenues, control costs, and generally provide a better quality of care." The revenues from the therapy company help cover the costs of HVA’s corporate offices, so members of the alliance are no longer required to pay dues. All the excess money is redistributed to members to help them meet their missions. Over the last five years, approximately $400,000 has been distributed to HVA’s eight members.

Another successful program that HVA instituted was a school to train nurse aides. "We had a serious lack of aides," said Gallagher, "a high turnover, and no training programs in our region. "So in 2002, we got a private school license and created a school of nurse aide training. We’ll graduate more than 200 nurse aides this year.
FBN also distributes excess revenues to its members and has reduced member dues. "Basically, we give back 50% of what we receive," said Linda Massie, executive director. FBN’s first initiative back in 2000 was to gain an ownership interest in a full-service pharmacy, specifically devoted to long-term care, through which the 13 members of the FBN alliance can receive preferential pricing, customized services, and specialized programs. The alliance also formed a liability insurance company through which members save six-figure amounts each year.

In addition, FBN instituted the FBN Health Benefits Group, in partnership with Highmark Blue Cross Blue Shield, that provides group volume discounts on specialized health insurance for employees. The alliance also helps members reduce insurance-rate volatility through a variety of employee health and wellness programs.

Both HVA and FBN offer educational programs to their members that will now cross over between the two groups and be expanded. "Because of the skyrocketing cost of gas and travel, we’re looking at teleconferencing our regional programs and also taping them," says Gallagher. "You can attend the program on Friday or see it next week or next year." And that would all be done under the auspices of the WPA.

The alliance provides a structure for members to share information, solve problems, compare policies, and avoid duplicating efforts. "The sky’s the limit as far as what an alliance can do," said Gallagher. "It really depends on whether the idea fits the members’ missions."

"The greater the numbers, the greater the power," added Massie. "But it’s important for members to be willing to share information for the greater good. An alliance requires trust."

HVA is already providing rehab services in a number of FBN member facilities in Pittsburgh, and some HVA members have started using FBN’s Highmark insurance program. "It took awhile for our members to accomplish things together, and it will be the same with this new alliance," Gallagher said. "But now we have the structure in place to make it work."
 

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