Courtesy of a new financing corporation, Commonwealth Care Alliance has secured $10 million in debt financing to support its rapid growth in patient enrollment since the passage of the nation’s Affordable Care Act in 2010.
The funding comes from newly created Vital Healthcare Capital, a New York-based nonprofit that launched this week with support from the Robert Wood Johnson Foundation.
Commonwealth Care Alliance, a nonprofit alliance of health care providers that supplies services for patients eligible for both Medicare and Medicaid, has seen rapid expansion of late, with the number of enrollees from the 10-year-old program expected to hit 16,000 by July 1, up from 6,000 since October.
The increase follows a national trend. The Affordable Care Act has drastically increased the number of people eligible for both Medicaid and Medicare. The Centers for Medicare and Medicaid Services has implemented dual-eligibility programs in 11 states, with enrollee estimates as high as 1.3 million people.
With an explosion in eligible clients, “There is a sense in these populations that there is an opportunity for something better in terms of their health care delivery and their health,” said Robert Master, the CEO for CCA. “We believe that that’s the reason this is happening, and it feels like a great show of confidence.”
Though Master said the nonprofit has expanded organically, using the money received from rate-adjusted premiums to pay for the expansion, state regulation requires a significant amount in reserves to protect against losses.
The loan will help fill that requirement as the nonprofit begins to cover thousands of more clients and plans to double its employees to 630 from 331 in 2012 to 630, Master said.
Commonwealth Care Alliance is the lead agency in the state for engagement of joint Medicaid and Medicare clients. The nonprofit, which had a $3.8 million operating profit as of 2012 financial records, gives under-served populations access to health care by coordinating with other physicians and hospitals, investing in the growth of community resources and creating their own physician groups and care models.
The organization has long aided dual-eligible seniors through these methods, with large help from Robert Wood Johnson Foundation grants. With new eligibility requirements under health care reform, the group can now add those under 65 who qualify, such as people with physical disabilities, developmental disabilities, severe mental illness, and advanced HIV and AIDS.
Master said the Vital Healthcare Capital loan, provided as part of a discounted-loan program run by the Robert Wood Johnson Foundation, is a vote of confidence in the organization’s ongoing expansion.
“(These investors) could have gone other places. The fact that they recognized (us in their first investment) is something that really meant a lot in terms of their confidence and our ability to succeed,” Master said. “It puts more pressure on us to succeed, which we welcome. It is going to be a showcase.”
Vital Healthcare Capital CEO Steve Weingarten said Commonwealth Care Alliance was the perfect organization to kick off its investment strategy. The company expects to leverage $100 million in revolving loans into nearly $500 million in capital investment at patient service providers such as Commonwealth throughout the nation.
“The motivation was understanding that our health care system is changing drastically … the flexible financing we did to take advantage of the opportunity and the challenge of health care reform is a big deal,” Weingarten said. “To be a source of flexible financing to help (Commonwealth Care Alliance) do what they do and help them scale their model, that’s the mission of our organization.”