PACE Predevelopment Loan Application to The Alliance for PACE Innovation and Quality

The Alliance for PACE Innovation and Quality (APIQ) invites applications from nonprofit organizations interested in borrowing flexible capital from a pilot PACE Predevelopment Loan Fund designed to support launching or expanding PACE programs. The funds provided by the loan are intended to support an organization’s ability to quickly move forward with the assessment and planning needed to initiate or expand a PACE organization.

 

Background

The Alliance for PACE Innovation and Quality is a national, 501(c)(3) nonprofit organization whose mission is to support the continued advancement of PACE quality, expanded PACE access, and PACE growth. The Program of All-Inclusive Care for the Elderly (PACE®) Model of Care is an innovative, fully integrated care provider for individuals with significant healthcare needs. PACE programs coordinate and provide all needed preventive, primary, acute, and long-term care services so that older adults and other individuals needing care can continue living in their homes and communities.

As part of its mission, APIQ has encouraged its members to plan for growth pursuant to a goal of serving 200k older adults by 2028--an over 20% compound annual growth rate from the 60,000 older adults served in 2022.

PACE Predevelopment Loan Fund

To support its members in the PACE growth objective, APIQ is creating a pilot revolving loan fund—the PACE Predevelopment Loan Fund (“Loan Fund”)—that will provide three key benefits to organizations consider the launch or expansion of a PACE program:

1. Access to often scarce, flexible capital for predevelopment purposes (the loan itself)
2. Leverage (the ability to elevate the priority of PACE development within a sponsor organization due to the APIQ loan itself and/or the loan’s capacity to attract matching capital)
3. Access to expertise (ongoing dialogue with APIQ, as well as referrals to its expert network of PACE-focused lenders, funders, advisors and consultants)

Specifically, the Loan Fund will:

• Make loans of up to $50,000 with two-year terms and interest rates of 2% to qualifying nonprofit organizations seeking to launch or expand PACE programs. 
• Finance the predevelopment needs of a small number of nonprofit organizations, including the expenses of carrying out a feasibility study and/or business plan that demonstrates strong potential to raise the full amount of capital needed to execute the proposed initiation or expansion of a PACE organization and operate the program sustainably. Loan proceeds can also be used to perform research on potential PACE sites, funders, investors, and other critical partners.

APIQ understands that there are nonprofit organizations well positioned to meet their community's needs that may lack the startup capital to plan and execute program launch or expansion. The PACE Predevelopment Loan program is designed to provide a flexible startup loan for such organizations that are strongly mission-aligned and operating in areas of high need where the policy environment can foster program success.

Significantly, the loan will require matching funds, which APIQ expects nonprofit sponsors will be able to attract. While the Fund’s loan is designed to be repaid when the organization secures additional financing to execute its PACE expansion plans, the Fund may, in its sole discretion, forgive some or all of the loan in situations where, despite the organization’s demonstrated best efforts, full execution of the plan is not possible in the foreseeable future.

Qualifications for Launching or Expanding a PACE Program

In considering whether your organization would be a good candidate for borrowing from the PACE Predevelopment Loan Fund, APIQ suggests the following critical success factors for PACE programs:

• Sustained Organizational Capacity and Commitment to PACE: A critical factor for success is the organization’s long-term commitment to PACE as a model of care for the nursing facility-eligible population, including the availability of an internal champion(s) to secure resources for the program’s success. PACE programs that start or expand today are likely to face greater competition and pressures to achieve cost efficiency given Medicare and Medicaid budget challenges. 
• Sufficient Demand for PACE Programs: PACE enrollment is largely a function of the size of the population that is nursing facility eligible within a designated service area, and the availability of alternative programs and services. At the same time, there is a critical need for PACE centers in many rural areas, and APIQ encourages organizations with the capacity to address this need to consider applying. 
• Positive Market Factors: Prospective PACE sponsors must understand local competitors to PACE for the broader dual-eligible population and nursing facility-eligible population, and be able to articulate a strong, differentiated value proposition. 
• Strong State Support: Given the flexibility being granted to state Medicaid agencies in serving dual eligibles with innovative models of care, a number of states are moving aggressively towards managed care approaches such as PACE to meet the needs of this population with improved quality and reduced costs. A successful PACE expansion candidate will have strong odds of securing state support for its efforts. 
• Adequate Payment for PACE Services: PACE programs receive payment from Medicare and Medicaid for all dual eligibles, which represent about 90 percent of enrollment. PACE payment rates vary widely across states. 
• Adequate Capitalization: Capital investments for PACE programs vary widely depending upon the organizations' current facilities and systems (infrastructure) and upgrade or expansion needs. In recent years, costs ranged from $1.5 million to $5 million. Higher interest rates and other costs will likely increase capital requirements for the same projects in today’s market and may require organizations to phase their expansion plans. Experience to date has suggested that payback can occur in 48 to 72 months. The APIQ loan will require matching funds, which the organization can provide through grants, its own capital, in-kind support, and/or debt financing. Ideally, the APIQ loan will constitute no more than 50 percent of the organization’s predevelopment phase budget.

 

PACE Predevelopment Fund Application

APIQ is seeking applications to identify organizations that understand the PACE model, have the capacity and commitment required to move forward with the launch or expansion of a PACE program and need a modest source of flexible financing to advance the planning process.  

If you have questions about the application process, please contact Peter Fitzgerald, Executive Vice President, Policy and Strategy, National PACE Association, peterf@npaonline.org.After submitting the application, the APIQ team will contact you for further discussion of your plans.

Organization Information:

Capacity Assessment and Use of Loan Proceeds.  Please rate your organization’s strength with regard to each key area below on a scale of one to five, with five being the most favorable. For each area, please briefly explain your score and describe how you would use the APIQ loan to help address areas with lower scores that need capacity building to enable PACE launch or expansion. For example, an organization that has not yet prepared a feasibility study or business plan can explain that it would retain experienced consultants to do that with the help of a loan from the PACE Predevelopment Loan Fund. An organization that needs to build, buy or lease a new building can explain that it might retain a real estate consultant to determine the best approach under current market conditions. 

 

To complete this table, please download this File, create a copy (do not modify the original file), and upload your responses. 

 

 

Thank you! Please upload audits, staff bios, and narrative responses to Key Areas 1 – 9, as well as up to three other documents you consider relevant. APIQ looks forward to reviewing your application and following up with you soon!

 

Please submit any additional documentation that may help us assess your capacity.

Disclosure

Any Respondent agrees to keep confidential all nonpublic information about the Fund and agrees that persons or entities with which the Respondent participates in responding to this application will be bound by the same confidentiality obligations.  All costs associated with developing or submitting this applicant, or providing oral or written clarification of its content, shall be borne by the Applicant.