InnovAge assets must help elderly, disabled
Colorado is a young state that is getting old fast. By 2030, Colorado’s population of residents older than 65 will be 125 percent larger than it was in 2010, growing from 550,000 to more than 1.2 million.
With the prospect of an aging Colorado quickly becoming a reality, virtually everyone would prefer to remain at home and independent. We hope our family and friends can do so as well.
Helping to fulfill that hope for the frail elderly and disabled, Programs of All-inclusive Care for the Elderly (PACE) offers a range of services to people over 55who qualify for nursing-home level care but wish to remain independent. PACE programs provide enrollees with doctor visits, medications, day programs, behavioral services, hospital care, and long-term services and supports. Most PACE participants are enrolled in bothMedicare andMedicaid.
During the last Colorado legislative session, Denver-based InnovAge backed a bill thatwould let nonprofit PACE providers operate as for-profits— anticipating a parallel change in federal law. InnovAge is Colorado’s largest PACE provider and among the largest nationally. The billwas approved and made effective earlier this year.
Concerned about conversion
In late October, the nonprofit InnovAge filed a plan with the Colorado attorney general to convert to a for-profit company. Officials from InnovAge say conversion is necessary for the company’s growth. But InnovAge’s proposal has raised concerns with advocacy groups, including the Colorado Center on Law and Policy, Colorado Consumer Health Initiative and Colorado Cross-Disability Coalition. Additionally, several public charities— including the Rose Community Foundation, The Colorado Trust and the Colorado Health Foundation— have voiced their concerns through written public comments and testimony at a public hearing in December.
Why are these organizations concerned? In short, the conversion affects thousands of elderly and disabled Coloradans and involves hundreds of millions in community assets. Among the issues at stake:
• InnovAgewants to dedicate proceeds from the conversion to its own foundation, with a self-appointed board. An organization with direct ties to InnovAgemay not be the appropriate custodian because there is a risk it could inappropriately favor the newly formed for-profit. It is critical to involve affected communities regarding how theywould best be served by the hundreds of millions of dollars of community assets thatwill be realized by the conversion.
A new independent foundation may better serve elderly and disabled Coloradans, or an existing foundation may be able to disburse funds more efficiently. Colorado has significant experience with conversion foundations, and we should learn from that experience. For example, public input had a substantial positive effect on the creation of the Caring for Colorado Foundation, realized as a result of the conversion of Blue Cross Blue Shield of Colorado.
Review InnovAge assets
• An independent valuation expert should review the assets stated by InnovAge. While InnovAge estimates the value of its assets at $213 million, the valuation might be closer to $400 million by the time the transaction occurs because the potential market for PACE services is growing and Denver’s real estate market is booming. Under common law, such assets belong to the people, and should benefit the populations that the converting nonprofit was established to serve.
• If the conversion is approved, the quality of care should be monitored. Any change of ownership in an organization that serves a fragile population raises concerns.
Coloradans should encourage Colorado Attorney General Cynthia Coffman to consider whether InnovAge’s assets are valued fairly and allocated appropriately and to ensure that the level of care provided by the new for-profit entity is not degraded. The attorney general will accept written comments on the conversion proposal on her website until Jan. 8.
InnovAge’s substantial value— which was built through public funding and years of tax-exempt status— should be used to benefit the frail elderly and disabled.