PACE Market Assessment: For-Profit Expansion
Problem
The impact of for-profit organizations on the PACE landscape is understudied.
The Programs of All-Inclusive Care for the Elderly (PACE) is a Medicare and Medicaid funded program that provides comprehensive medical and social services to certain elderly individuals who are at risk of needing nursing home care but wish to remain in their homes.
Originally, PACE programs, established in the early 1970s, were exclusively run by nonprofit organizations. However, in 2015, regulatory changes allowed for-profit entities to become permanent PACE providers. The entry of for-profit organizations, particularly those backed by private equity and venture capital, has transformed the PACE landscape, but there remains a lack of comprehensive analyses examining how, where, and why for-profit PACE has grown or how that growth pattern differs from traditional nonprofit PACE expansion. Understanding these patterns and their implications will help policymakers, health care providers, and stakeholders ensure the sustainable expansion of high-quality, integrated care for the aging population.
Solution
NORC conducted a retrospective analysis of the evolution of the PACE landscape.
Arnold Ventures commissioned NORC to conduct a comprehensive retrospective analysis of the evolution of PACE organizations between 2016 and 2022, with a focus on the changing landscape of for-profit versus nonprofit PACE organizations.
Our research examined three key dimensions:
- Changes in both the number of PACE contracts and overall enrollment figures
- Demographic composition of PACE participants and geographic distribution of expansion efforts
- The relationship between private equity and venture capital investments and the growth trajectory of for-profit PACE organizations
To ensure robust findings, the research team used a variety of data sources, including Medicare and Medicaid enrollment and claims data, while supplementing quantitative findings with targeted interviews with for-profit PACE leadership and other relevant stakeholders.
Result
For-profit PACE growth outpaced that of their nonprofit counterparts.
The study found that for-profit PACE organizations have expanded rapidly, growing their contracts by 182 percent and enrollment by 173 percent between 2016 and 2022, compared to nonprofits’ 6 percent and 44 percent growth, respectively. While nonprofits still hold most contracts and enrollees, for-profits now account for 21 percent of contracts and 26 percent of enrollment.
For-profit programs increasingly serve younger, more racially and ethnically diverse populations, with a 400 percent increase in Black enrollees and a 400 percent rise in Medicaid-only participants. They have also expanded into rural and low-income areas, where enrollment grew by 493 percent and 326 percent, respectively, compared to 58 percent and 19 percent growth in nonprofit programs.
Private equity and venture capital investment in PACE surged, driving the number of investor-backed for-profits up by 300 percent. Some states, including Pennsylvania and Virginia, saw for-profit growth coincide with nonprofit declines. These shifts raise key considerations for policymakers in ensuring fair access, high-quality care, and balanced growth in the evolving PACE landscape.
