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Innovative Business Approaches for Area Agencies on Aging: Ohio AAA’s Limited Liability Company, direction Home. ACL Learning Collaborative October 2, 2013. Larke Recchie CEO: Ohio Association of Area Agencies on Aging and Direction Home, LLC Past experience: AAA Director

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Innovative Business Approaches for Area Agencies on Aging: Ohio AAA’s Limited Liability Company, direction Home

ACL Learning Collaborative

October 2, 2013

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Larke Recchie

  • CEO: Ohio Association of Area Agencies on Aging and Direction Home, LLC
  • Past experience:
    • AAA Director
    • Senior housing developer and management,
    • Home care agency director
what you will learn
What you will learn
  • Ohio’s Area Agencies on Aging experience with developing a Limited Liability Company (LLC) to expand business opportunities
    • Why Ohio AAAs did a LLC
    • Structuring a LLC
    • Lessons learned
    • Potential business opportunities
why did ohio s aaas create a llc
Why Did Ohio’s AAAs create a LLC
  • The Aging Network’s Changing Paradigm
    • Managed Long-Term Services and Support (MLTSS) have changed the paradigm: the AAA traditional role is being altered and usurped
    • Business practices must evolve to stay relevant.
    • New business lines may be necessary.
    • Collaborate and strengthen brand.
    • Harness power and innovate.
core competencies of aaas
Core Competencies of AAAs
  • Recognition of skill base is critical in any enterprise
  • AAA Advantage: draw on power that does not exist in the for profit organization:
    • sense of community,
    • altruism - motivate community volunteerism
    • 40 year successful history built enormous goodwill
    • collaborative
    • transparent
conflict between mco and aaas
Conflict between MCO and AAAs
  • AAAs inhabit the LTSS space – cost containment with successful community based approach that MCOs wish to profit from
  • AAAs already know how to do what MCOs are promising to deliver in the future
  • AAAs are needed in the short run for their core competence but can be an impediment in the long term to MCO’s maximizing profit
  • Government doesn’t go back when policy is a mistake
comparison of nonprofit quasi government vs for profit organizations
Comparison of Nonprofit/Quasi-government vs For Profit Organizations
  • Mission inspires altruism

MCO can't provide the same mission driven impression: “What Money Can’t Buy” – Harvard Professor, Michael Sandel – “How Markets Crowd Out Morals”

  • AAAs call on caregivers to contribute much – consumers/caregivers more skeptical of contributing when the funder is making a profit
steps to successful transformation
Steps to Successful Transformation
  • Harness power and think about innovation.
  • Collaborate and strengthen brand
  • Structure for success in different market arena
  • Focus on Interdisciplinary Collaboration
  • Develop innovative funding streams
  • Price services for success
structure of direction home llc
Structure of Direction Home, LLC
  • Direction Home, LLC
    • Rebranding of AAAs for new markets
    • Limited Liability Company owned by 12 AAAs: “For-Benefit” organization
    • Operates as one entity selling statewide services of AAAs
structure for success in different market arena
Structure for success in different market arena

Direction Home, LLC operates as a “For Benefit” company

  • Any profit is distributed to AAAs for mission related activities (nontaxable)
  • Can provide other important benefits:
  • Borrowing
  • Surety Bonding
  • Letters of Credit
  • Centralized contract compliance and accounting
for benefit company
For Benefit Company
  • For benefit company can be fashioned out of these legal entities to achieve its objectives:
    • LLC,
    • Limited Partnership
    • L3C
focus on interdisciplinary collaboration
Focus on InterdisciplinaryCollaboration
  • Hospitals
  • Physician practices
  • Insurance companies
  • Managed Care companies
  • Retirement Systems
  • Housing
  • Other community based organizations
lessons learned
Lessons Learned
  • Initial investment makes life easier
  • Plan for legal costs, marketing costs, insurance, back office
  • Innovation means starting small sometimes
  • MCOs will want your activities to fit into their design
  • Product pricing is essential
  • Willingness to talk through tough issues and to help out – weigh when something is AAA opportunity and when beneficial to act as statewide contractor
  • Friendly competition is okay but collegiality is most important
thank you
Thank You
  • LarkeRecchie
    • Ohio Association of Area Agencies of Aging
    • recchie@ohioaging.org
    • 614-481-3511
    • www.directionhomeohio.org
    • www.ohioaging.org