Testimony to Joint Appropriations Committee January 22, 2020 1 - - PowerPoint PPT Presentation

LifeScape Testimony to Joint Appropriations Committee

January 22, 2020

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20 2020 20 Le Legisla lative Se Sess ssion Fu Fundin ing Ga Gap Analysis Adult Da Dail ily Ra Rate Fu Fundin ing Gap analysis based on Year-ending June 2019 actual financial results with incremental investment requirements needed to achieve a reasonable and sustainable standard of care.

Gain/Loss F19 Loss Workforce Insurance Case Mgmt DSP's CSS's 2.5 $ 0.7 $ 3.0 $ 0.4 $ 0.5 $ 1.2 $ 0.3 $ Value of Gap Analysis Factors in Millions

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20 2020 20 Le Legisla lative Se Sess ssion Fu Fundin ing Ga Gap Analysis Adult Da Dail ily Ra Rate Fu Fundin ing

• Current funding is 75.4% of estimated

standard of care funding request

• CSP average daily rate is higher ($155.16)
• Based on a census of 430 adults the

incremental funding request is $7.2 million inclusive of Federal and State funding dollars

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Evolution of the Community Support Business Model

Center for Medicaid & Medicare Services (CMS) Department of Human Services (DHS) State Institutions Privatization / Subcontracting of Adult Services to CSPs Resulted in Hundreds of Millions of Dollars of Savings Annually

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Current Community Support Business Model

Funding of policy and process need to be aligned in order for providers to be sustainable and compliant.

Specialty Hospital & Rehab Children’s ICF / Residential Specialty School

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Hospital Rehab Payor, Neglect & Aux

LifeScape’s business model is highly regulated and burdensome

Historically, the model doesn’t allow for collaborative or innovative solutions nor does it recognize the need to balance policy with funding capacity at the provider level.

Regulatory Oversight

• Department of

Human Services

• Department of

Social Services

• Department of

Education

• Department of

Health

• Department of

Labor

• Department

Transportation

• OSHA
• Federal – Center

for Medicaid Services (CMS) Accreditation Oversight

• Council on Quality

Leadership (CQL)

• American Board

for Certification of Orthotics, Prosthetics and Pedorthics (ABC)

• Commission on

Accreditation of Rehabilitation Facilities (CARF)

• National

Commission on Accreditation of Special Education Services (NCASES) Professional Oversight

• National

Association of Speech-Language and Hearing Association

• American

Occupational Therapy Association

• American Physical

Therapy Association

• National

Association of Special Education Teachers

• Board of Nursing
• Board of Pharmacy
• National Institute

for Occupational Safety and Health

• National

Association of Social Workers

• American

Psychological Association

• Behavior Analyst

Certification Board

• Rehabilitation

Engineering and Assistive Technology Society of North America

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LifeScape’s Foundation (comprised mainly of endowment funds) generates annual distributions that have been historically used to pay the day-to-day operating costs due to underfunding / discontinued funding / gain/loss Raising funds to pay daily operating expenses is extremely difficult – people tend to give to hard assets Goal of foundation is to support strategic and capital project initiatives such as technology, workforce and building improvements which are not funded in the daily rate

LifeScape’s Foundation Role in Supporting the Organization

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(In $ Millions) F19 F18 Audited Adult Net Income (3.18) $ (3.84) $ Foundation Funding 2.58 $ 2.50 $ Net Income w/ Foundation (0.61) $ (1.34) $ Less: Depreciation 0.80 $ 0.78 $ Estimated Cash Flow 0.20 $ (0.56) $

Business Model – Strategic Initiatives

• Workforce efforts
• Pay increases with average DSP wage now $15.09 per

hour based on last legislative funding – goal of $17.50 as average allowing us to have near $20.00 rates for high behavioral or medically complex care – Sioux Falls average hourly rate in 5/18 $21.56

• We now pay 85% of individual health insurance

premium

• Now offering tuition reimbursement support services

through national program

• Employee referral program now generates 1/3 of our

applications

• Collaborative efforts with Sioux Falls Development

Foundation, Sioux Falls School District, USD, DSU, AU, STI

• Consolidated and automated our purchasing system
• Automating HR including scheduling
• Semi-annual review of performance indicators by line of

service

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Key Costs Associated with Workforce Challenges for Adult Day Services

➢ Labor cost makes up 85% of LifeScape’s budget ➢ Adult day services statistics ➢ 291 adults supported ➢ Ratio: 1 staff to 4.2 adults (in 10 different LifeScape settings) - established by care team inclusive of DHS ➢ Incremental labor costs associated with:

Incremental Cost to Fulfill Ratio Requirement: Annual Cost % of Current Reimbursement Notes: Leave 218,456 $ 8.2% 7,849 Hours @ Wage + OT Vacated Positions 185,714 $ 7.0% 14.0% Positions Open @ OT Only Turnover 192,112 $ 7.2% 32.0% Turnover @ Wage for training days Medical Visits 174,529 $ 6.6% 2,853 Visits @ Wage & Mileage 770,811 $ 29.1%

The Governor’s proposal for 0% increase will greatly impact these ongoing costs as we become less competitive in the community – we believe the Sioux Falls average hourly wage will continue to increase at rate far above consumer price index given extremely low unemployment and enhanced efforts by the Governor to attract new businesses.

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Funding has not kept up with State’s hourly wages – focus on business development within the State has been successful but workforce supply hasn’t kept up with demand driving substantial growth in hourly wages Approximately 85% of our budget is labor related Using South Dakota minimum wage as a proxy for wage inflation – the resulting daily rate should now be $180.97 based

• n the last rebasing effort in 2007 vs
• ur current rate of $139.90

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One-time Funding Opportunities

• Solve gain/loss impact to providers with the belief the rate

remodeling will establish a new baseline going forward next year

• Internal technology / automation - admitting process,

purchasing, HR, teletherapy infrastructure

• High value assets like cars that tend to get over

utilized

• Repairs on homes - may be able to leverage with other

affordable home programs

• One-time bonuses (if we believe the rate setting

project will yeild a higher outcome) to keep existing employees

• One-time sign-on bonuses to attract new employees

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20 2020 20 Le Legisla lative Se Sess ssion Fu Fundin ing Ga Gap Analysis Adult Da Dail ily Ra Rate Fu Fundin ing

• Current funding is 75.4% of estimated

standard of care funding request

• At minimum bringing all CSP funding

to average daily rate of $155.16 - $2.4 million for LIfeScape

• Based on a census of 430 adults the

incremental funding request is $7.2 million inclusive of Federal and State funding dollars

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