BUSINESS ACUMEN CASE STUDY

Winning the Contract: New 

Revenue Stream for Community 

Organizations

Submitted by Sandy Atkins

Vice President of Strategic Initiatives, Partners in Care Foundation

About the Network

The Partners at Home Network (PAH) is a growing statewide 

collaborative comprised of 22 public and private community-based 

organizations (CBOs) who serve clients through contracts with the 

Partners in Care Foundation, an NCQA-accredited nonprofit thinktank 

and service provider in San Fernando, CA. 

The Foundation holds multiple service agreements with large healthcare 

entities such as medical groups and health plans. To expand the reach 

and impact of these agreements, the Foundation subcontracts with 

providers across the state to deliver services to eligible clients. 

As the lead agency of PAH, the Foundation manages referral receipt 

and assignment, network-wide IT systems, program workflows and 

policies, and strategic business development. In addition to services, PAH 

members provide thought leadership around expanding and improving 

integrated care that address social determinants of health. PAH’s purpose 

is to improve patient health outcomes by providing evidence-based care 

coordination, medication reconciliation, and health self-management 

services that reduce hospital readmissions and produce mutual financial 

benefit for both PAH and the payer; to integrate services that address 

social determinants of health, like environment and social and caregiver 

supports, into the continuum of care; and to create an innovative delivery 

system of community-based care.

Winning the Contract

To create a more integrated care system that recognizes and responds 

to health determinants beyond medical care–such as social services, 

care coordination, and environmental safety—CBOs are increasingly 

seeking and winning contracts with healthcare payers to serve 

ACL Business 

Acumen Initiative

To enhance the 

readiness of communitybased aging and 

disability organizations 

for contracting with 

integrated care 

entities, and prepare 

them for partnering to 

develop and implement 

integrated care systems, 

the Administration for 

Community Living (ACL) 

established its Business 

Acumen Initiative. As 

part of this initiative, 

learning collaboratives of 

well-organized networks 

of aging and disability 

organizations received 

technical assistance in 

marketing, contracting, 

service pricing, and 

other business areas. 

In addition, members 

of each collaborative 

shared relevant 

experiences, lessons 

learned, innovative 

ideas, and best practices 

for providing integrated 

care in a variety of 

community settings. 

Case studies such 

as this further ACL’s 

aim to share models 

and information with 

communities and local 

agencies facing similar 

challenges.

ACL.gov ACL is an operating division of the U.S. Department of Health and Human Services.
patients inside and outside of hospital walls. 

Contracting with health payers means a 

new revenue stream for CBOs as well as 

a new avenue to reach those in need. The 

contracting process is new to many CBOs, 

and here we’ve shared our process and 

lessons learned.

Step 1: Build Relationships

June Simmons, MSW, had years of experience 

as a hospital social worker, rising to the 

position of Director for Patient Services and 

then moving to a CEO position in the largest 

home health agency in the U.S.—unusual for 

a social worker. For years, she was active in 

healthcare professional organizations, making 

contacts that would be crucial when the home 

health agency was sold and morphed into the 

Partners in Care Foundation. 

Another crucial factor in building relationships 

was the Foundation’s Board of Directors—

strategically built to include strong voices 

within the healthcare sector capable of 

making additional important connections to 

potential payers. One of these relationships 

was with a physician who joined the corporate 

medical staff for a major health plan. The 

Chief Medical Officer of the plan had a 

background working in an integrated medical/

long-term services and supports plan and 

was intrigued with the idea of community 

partnerships. After an initial high-level 

meeting, a small meeting of department heads 

established potential interest. 

Step 2: Strut Your Stuff

As a follow-up to initial meetings, Foundation 

staff sent a list of services—evidence-based 

self-management programs plus a detailed 

list of each one of the components of its 

Medicaid waiver program (e.g., intake and 

assessment, Medicaid advocacy, navigation, 

benefits counseling, service coordination, 

purchase of service). In a 4-column document 

showing services, descriptions, durations, and 

outcomes, the Foundation used data about 

its own impact wherever these existed and 

reported research-based outcomes wherever 

its own measurement had not been possible. 

It focused on better patient outcomes, 

improved satisfaction and engagement, and 

lower utilization of expensive services (e.g., 

hospital). This was an excellent opportunity to 

demonstrate our speed and responsiveness, 

producing a document with tentative pricing 

over the year-end holidays, in preparation for 

a major meeting to be held a week later. The 

influence of the plan’s CMO at this meeting 

was evident; other staff had taken evidencebased self-management programs off the list 

and with a word from the CMO, this service 

became a major focus. 

The menu of service options evolved during 

contract negotiations, finally coalescing into a 

document that helped translate the services 

into the plan’s way of understanding their 

members’ needs: a breakdown of both the 

population and the services into tiers reflecting 

increasing risk and complexity of services. 

Step 3: Contracted Services and Target 

Populations

The contract covers a menu of services 

including service coordination, evidence-based 

self-management, care transitions, and home 

evaluations. The three levels of service (tiers) 

have corresponding targeting criteria: 

ACL.gov ACL is an operating division of the U.S. Department of Health and Human Services.
 Tier 1 (lowest risk/fewest impairments): 

Members can receive evidence-based selfmanagement programs. 

 Tier 2 (moderate risk): Members are 

offered in-home evaluations that include a 

computerized medication risk assessment 

and alert system called HomeMedsSM. Also 

included is a home safety evaluation and a 

psychosocial assessment with short-term 

care coordination called HomeMedsPlus. 

People recently hospitalized are also 

offered transition coaching and Rush 

University’s Bridge Model social services as 

needed. 

 Tier 3 (highest risk): Members with 

the most complex needs are offered 

a combination of services and care 

coordination with multiple home visits over 

90 days. 

Targeting criteria for each tier are based 

on issues such as: the number of chronic 

conditions, health literacy, disease selfmanagement, caregiver issues, and prior 

hospitalization or emergency department 

(ED) use.

Step 4: Value Proposition

Results mattered. The Foundation presented 

excellent results for its existing care 

transitions programs and a HomeMedsSMbased contract with a major physician group, 

both of which produced a positive return 

on investment in the context of a quality 

improvement initiative. 

We persuaded the physicians that some of the 

things we touch can influence the outcomes 

they care about: patient satisfaction, member 

retention, quality measures, and reducing 

ED and hospital use. Thus, we could present 

ourselves as a valuable and novel player 

composed of solid, experienced community 

agencies, as opposed to a “newbie” with no 

track record.

We spent a significant amount of time and 

resources helping the payer understand 

who the PAH members were, what they did, 

why the Network mattered, and how these 

new services provided by a different type of 

workforce could make a difference in their 

members’ lives and in the payer’s bottom 

line. By educating the payer on PAH’s role, 

its potential for efficient regional and even 

statewide contracting, and its integral role in 

quality improvement with a positive ROI, we 

paved the way for PAH to be regarded as a 

business partner rather than a vendor.

Step 5: Closing the Deal

The timeline covered an estimated 10-month 

period from the initial informational sessions 

and telephone calls with decision-makers, 

to negotiation of contract terms, executing 

“playbook teams” to plan workflows 

and communication approaches, and 

implementation of the contracted services. 

We spent about $40,000 on legal fees—way 

more than any other contract. This is, in part, 

because the population included Medicare 

beneficiaries. Medicaid rules are less 

stringent. IT security was a major component 

of the terms they imposed.

ACL.gov ACL is an operating division of the U.S. Department of Health and Human Services.
Unanticipated Challenges

Accreditation and the Medical Loss Ratio: 

Obtaining accreditation was a key step in 

keeping this contract deal. Both the California 

Department of Managed Health Care and 

the payer’s own standards require that case 

management activities only be delegated 

to an accredited or licensed entity. Another 

reason for pursuing accreditation was the 

advent of the Medical Loss Ratio (MLR) 

provision of the Affordable Care Act that 

requires payers to spend 85% of premiums 

on clinical care and quality improvement 

efforts (e.g., case management). The 

Foundation’s previous pilots had been paid 

with administrative funds, which under the 

MLR requirements are constrained to 15% 

of plan expenses. The Foundation is proud 

to have achieved complex case management 

accreditation through the National Committee 

for Quality Assurance. It was a costly, timeconsuming, and challenging accomplishment, 

but one that has helped raise PAH’s status as 

partner rather than vendor. 

Champions at all levels: PAH needed 

champions inside the payer organization, both 

at the front end (contract negotiation) and 

at the implementation stage once referrals 

were received. We were able to identify an 

organizational champion and physician within 

the payer organization who had prior health 

management experience and who saw the 

direct benefit of social services to health. This 

is crucially important because there may be 

line staff resistant to change and perceived 

extra work—to the point of sabotage. Both 

peer champions and strong, committed 

managers can help overcome such resistance.

Building Referrals: Once the contract was in 

place, the experience of low referral volume 

highlighted a crucial need for strong working 

relationships with buy-in to the benefit of 

the contract and dedication to continuous 

improvement. Teams started with weekly 

operations meetings and still, eight months 

into the contract, meet every other week. The 

team now tracks referrals by each plan case 

manager to identify leaders/champions and 

those who appear to be less convinced of 

the value of the services. An unanticipated 

challenge leading to fewer referrals than 

expected was the plan’s decision to 

randomize qualified members into usual 

care versus PAH interventions; thus 50% 

of potential referrals were lost immediately. 

Ultimately, IT solutions that automate 

converting quantitative targeting criteria into 

referrals may prove to be best.

Lessons Learned

Don’t finalize pricing until you’ve read 

the entire contract. There were several 

unanticipated provisions that increased 

costs. For example, the contract required 

that an outside company perform member 

satisfaction surveys by phone. Also, IT 

security provisions involved an outside 

annual audit. Insurance requirements were 

higher than usual for a CBO – including 

“cyber” insurance (network security) and 

high umbrella limits. This was costly and has 

ACL.gov ACL is an operating division of the U.S. Department of Health and Human Services.
proven to be a barrier for providers who might 

be potential network members. 

Securing a contract with a large health plan 

can be costly. The Foundation spent more 

than $40,000 in legal fees and used an 

estimated 2,000 hours of executive-level staff 

time during the process, from introductions 

through day one of implementation. Additional 

expense was incurred to increase insurance 

coverage.

Insist on data sharing and collaborative 

planning for metrics. The path to more 

contracts depends on the ability to 

demonstrate results. It is important to agree 

on key measures for success and equally 

important that results be shared for quality 

improvement purposes and for future 

promotional activities.

Winning contracts may be easier than 

performance. Winning and negotiating 

contracts is fairly easy compared to building 

volume and managing the performance of a 

network. Persistence, charm, and excellence 

are needed to win over more resistant plan 

staff and address quality issues among 

friends within a network.

Use executive team and board members to 

your advantage. Foundation staff includes 

executives with experience in healthcare – 

hospital, skilled nursing, adult day health, 

hospice, and physician groups. The board has 

representation from health plans, medical 

groups, health systems, and hospitals, with 

skills including medicine, nursing, pharmacy, 

and consulting. Both the board and executive 

team have made important contributions to 

the contracting effort.

To learn more about business acumen and find tools to get started, visit the Aging and Disability

Business Institute and the Disability Network Business Acumen Resource Center.

ACL.gov ACL is an operating division of the U.S. Department of Health and Human Services.