Building Resilience in PACE Programs

Every September, National PACE Month shines a spotlight on Program of All-Inclusive Care for the Elderly (PACE) organizations. Running a PACE organization isn’t for the faint of heart. Home-based care in general is challenging, but the capitated model PACE organizations operate under creates a unique set of pressures, which many would refer to as the “Perfect Storm”. From navigating regulatory complexities, finding balance between CMS and state Medicaid requirements, to limited awareness and enrollment barriers, PACE organizations face a distinct combination of challenges.

While PACE programs don’t serve the largest share of home-based care patients, the wraparound care they provide is critical. These programs help people remain independent longer, reduce hospitalizations, and receive care in a familiar, community-focused setting. While smaller in number, PACE participants are often older adults with complex medical and functional needs, many of whom are low-income or dual-eligible for Medicare and Medicaid.

The challenges of a capitated model

PACE programs operate under a fixed monthly payment that must cover every participant’s needs from routine care to emergency interventions. This model does create a unique set of operational and financial pressures to navigate:

Financial risk

When a participant’s care costs exceed the fixed payment, the program absorbs the loss, which can strain smaller organizations or limit investment in growth and technology. Even when other participants cost less than their allotted capitation, the variability makes staffing and resource planning feel like a financial gamble.

Staffing and capacity pressures

Interdisciplinary teams are essential; however, recruiting and retaining specialized staff is difficult in a competitive market. When teams are understaffed, coverage for high call volumes, after-hours needs, and overall care coordination can create burnout and operational bottlenecks.

Operational consequences

Delayed follow-up can escalate into avoidable emergency department visits. Staffing gaps and resource constraints can compromise care quality. Financial pressures often force programs to delay investments in technology or systems that would improve efficiency and sustainability.

Strategies to sustain operations and protect margins

Despite these challenges, PACE organizations can adopt strategies to improve financial resilience, operational efficiency, and participant outcomes, giving them the ability to absorb variable costs while maintaining quality.

1. Extend the interdisciplinary team

Outsourcing triage during peak times or after-hours ensures participants get real-time clinical support even when center staff are unavailable

2. Establish failsafe systems for closed-loop coordination

Technology can be instrumental in establishing workflow compliance. Systems that track and document every interaction reduce the risk of missed follow-ups and strengthen the continuity of care.

3. Reduce avoidable utilization

Early, proactive interventions prevent costly adverse events and allow teams to focus on patients with urgent or complex needs. Analyzing call data can help identify trends in falls, medication needs, or symptom escalation, feeding into care planning and population health management.

4. Build capacity and sustainability

Automating routine outreach and offloading triage frees the interdisciplinary team to focus on high-value, in-person care and care coordination, supporting program growth without proportional increases in staffing.

Defending investment for long-term sustainability

It’s worth noting that implementing these strategies requires an investment and commitment in change management, even though PACE programs often face financial pressures that can make new spending difficult to justify. Developing a structured business plan that clearly articulates the value and anticipated return of these investments is critical. A well-documented plan can demonstrate how extending the care team, implementing closed-loop systems, and leveraging data-driven insights directly support:

• Clinical outcomes: reduced hospitalization and improved participant well-being.

• Financial stability: fewer avoidable costs and improved margin resilience.

• Operational efficiency: better staff capacity management and reduced burnout.

By framing these initiatives as investments in sustainability rather than optional expenditures, PACE organizations can protect operations, strengthen margins, and maintain high-quality care for participants – even when costs fluctuate across the population they serve.

If you need assistance or are looking for advice on how to best structure your business plan to defend these strategies, let’s talk.