LifeScape Testimony to Joint Appropriations Committee January 22, 2020 1
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. Value of Gap Analysis Factors in Millions 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 2
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 3
Evolution of the Community Support Business Model Center for Medicaid & Medicare Department of Human Services State Institutions Services (CMS) (DHS) Privatization / Subcontracting of Adult Services to CSPs Resulted in Hundreds of Millions of Dollars of Savings Annually 4
Current Community Support Business Model Specialty Hospital & Rehab Children’s ICF / Residential Specialty School Hospital Rehab Payor, Neglect & Aux Funding of policy and process need to be aligned in order for providers to be sustainable and compliant . 5
Regulatory Oversight Accreditation Oversight Professional Oversight • Department of • Council on Quality • National Human Services Leadership (CQL) Association of • Department of • American Board Speech-Language and Hearing Social Services for Certification of LifeScape’s business • Department of Association Orthotics, • American Prosthetics and Education model is highly regulated • Department of Pedorthics (ABC) Occupational • Commission on Therapy Health • Department of Association and burdensome Accreditation of • American Physical Rehabilitation Labor • Department Facilities (CARF) Therapy • National Association Transportation • National • OSHA Commission on • Federal – Center Accreditation of Association of Special Education Special Education for Medicaid Services (NCASES) Teachers Services (CMS) • Board of Nursing Historically, the model doesn’t • Board of Pharmacy • National Institute allow for collaborative or for Occupational innovative solutions nor does it Safety and Health • National recognize the need to balance Association of Social Workers policy with funding capacity at • American Psychological the provider level. Association • Behavior Analyst Certification Board • Rehabilitation Engineering and Assistive Technology Society of North America 6
LifeScape’s Foundation Role in Supporting the LifeScape’s Foundation (comprised Organization mainly of endowment funds) generates annual distributions that have been historically used to pay the day-to-day operating costs due (In $ Millions) F19 F18 to underfunding / discontinued Audited Adult Net Income $ (3.18) $ (3.84) funding / gain/loss Foundation Funding $ 2.58 $ 2.50 Raising funds to pay daily operating Net Income w/ Foundation $ (0.61) $ (1.34) expenses is extremely difficult – Less: Depreciation $ 0.80 $ 0.78 people tend to give to hard assets Estimated Cash Flow $ 0.20 $ (0.56) 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 7
• 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 Business average hourly rate in 5/18 $21.56 • We now pay 85% of individual health insurance premium Model • 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 Strategic Foundation, Sioux Falls School District, USD, DSU, AU, STI • Consolidated and automated our purchasing system Initiatives • Automating HR including scheduling • Semi-annual review of performance indicators by line of service 8
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: % of Current Incremental Cost to Fulfill Ratio Requirement: Annual Cost 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. 9
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 on the last rebasing effort in 2007 vs our current rate of $139.90 10
• 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, One-time purchasing, HR, teletherapy infrastructure • High value assets like cars that tend to get over Funding utilized • Repairs on homes - may be able to leverage with other Opportunities 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 11
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 12
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