Could HMO model work for human services?

Jan Berry, president of the MACC Alliance of Connected Communities, is floating the idea of using the health maintenance organization (HMO) model to provide human services.

It would work something like this. An organization would take a city block, a neighborhood or other defined area, and get paid so many dollars per person to provide a set of human services, such as chemical dependency, mental health, violence prevention and basic needs, similar to how HMOs get paid to provide health care.

“It’s a wild idea,” said Berry, who heads a partnership of 21 Twin Cities-based human service organizations. “I am trying to figure out how to get traction and capture the imagination of key funders.”

Berry offered her wild idea during the Minnesota Council of Nonprofits’ workshop Wednesday: “The State We’re In: Fulfilling Human Service Needs in a Time of Economic Uncertainty.”

The event followed up on a May 29 MCN meeting where frontline nonprofit human services organizations got a stark message. Funders and nonprofit leaders said the state fixed the last budget shortfall by dipping into reserves, a short-term fix. Next year’s human services funding is only getting worse, and foundations can’t fill the gap.

Jodi Sandfort, associate professor at the Humphrey Institute of Public Affairs at the University of Minnesota, moderated this week’s event and reiterated that message. When Berry asked if nonprofits had just hit a low point in the government’s normal funding cycle, Sandfort said no.

“We are in a fundamental sea change,” she said. “This isn’t a temporary shift.”

Doing less with less
About 70 people attended, and some said that instead of trying to do more with less, they would have to do less with less. The bulk of the meeting was a brainstorming session.

Some borrowed from the corporate playbook. One participant suggested a pot of money for a “tin parachute.” (Since corporate executives get golden parachutes to make mergers easier, why not give nonprofit leaders modest buyouts, removing the reluctant executive as one potential merger barrier?)

Berry’s idea — the human services HMO model — seemed to capture many people’s imagination. It’s a new approach to treating the whole person, rather than funding fragmented services, she said.

She has no written plan yet. The idea would need seed money to test and smart people from various sectors to flesh it out, but it is an experiment worth trying, she said.

MAP for Nonprofits (MAP) will post all of the ideas on its website. Judith Alnes, MAP’s executive director, said the Greater Twin Cities United Way’s Council of Agency Executives also would review the ideas and work on the next steps.

Tipping point

One of the more interesting questions raised during the session didn’t get answered. Yet.

David Therkelsen, executive director of Richfield-based Crisis Connection, said scale matters to nonprofits. He asked about the minimal annual budgets organizations needed to have good data collection, advocacy and other key infrastructure.

“What size do you have to be to support yourself well,” he asked. “The terms of that debate typically are, ‘Is it $5 million or is it $10 million?’ “

Sandfort said she believes nonprofits do have a budget “tipping point” and she is analyzing nonprofit survey data to define it. The answer could vary by area. For instance, arts organizations could have a different threshold from human services nonprofits. She’s crunching numbers. Stay tuned.

Participants broke into small groups by topic and the best-attended sessions focused on finding new capital. Participants discussed revolving loan funds, return on investment strategies and more.

Answers on how to better capitalize nonprofits can’t come soon enough for participant Barbara La Valleur, executive director of St. Paul’s Payne-Phalen Living at Home/Block Nurse Program. She has an immediate budget problem, the result of the uncertainty inherent in annual human services funding.

On three weeks’ notice, she said, her program lost competitive state grants it had received for roughly six years. That means an approximately $230,000 hit, roughly two-thirds of the program’s annual budget. The program served 408 seniors last year, including a large number of Latino elders, and kept 89 seniors out of nursing homes, she said.

La Valleur does not know why her program didn’t qualify this time. A Minnesota Public Radio account quoted a state official saying programs like La Valleur’s know there is no guarantee of ongoing grant money year to year.

La Valleur is writing more grants.

Conference updates
MCN’s annual conference Oct. 2-3 will focus on the government-nonprofit relationship, how they are changing and how nonprofits could be more strategic.

This column recently reported on Wilder Foundation’s conference: “Return on Investment: The Dollars and Cents of a Nonprofit Program’s Worth.” Powerpoints and webcasts are now available at Wilder’s website.

Comments (1)

  1. Submitted by Craig Brooks on 07/29/2008 - 11:13 am.

    HMOs have a bad history concerning serving people in need of health care. The model costs way too much for the administrative overhead. It does not treat the whole person but rather rewards the specialists and underpays the general proacticioner. Creating public / private partnerships to better serve persons in need of services is best done at the local level. The history of the State doing it at their level rewards political donations and does not focus on real need. Incentives are needed for the local governments to create these partnerships and incentives are needed for non-profits to serve the most needy and most difficult clients instead of passing them off back to local government. If you get public money to deal with a public problem, you should not be able to say no.

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