Denver-based InnovAge is making a first-of-its-kind move that has drawn scrutiny from public health and legal advocates. Now the public is getting a chance to weigh in.
The Colorado Department of Law is hosting a public hearing Thursday evening on the plan from , a provider of services for the frail, elderly and disabled, to convert from a nonprofit organization to a for-profit entity.
“InnovAge had gone as far as it could in nonprofit form,” said Michael F. Feeley, a lobbyist and legal counsel for InnovAge, which has about 2,500 patients in Colorado and about 3,000 companywide.
InnovAge wants to expand within its base of operations in Colorado, California and New Mexico, Feeley said, adding that the nonprofit currently has a wait list. To expand, InnovAge needed greater access to the capital markets, he said.
InnovAge has found a financial partner in , a New York-based private equity firm that has submitted an acquisition bid of $186.4 million in cash and stock.
A conversion to for-profit is allowed in Colorado after a law passed this year that lets the state contract with for-profit entities under the . PACE is a Medicare and Medicaid program that provides nursing-home-level care for people 55 and older who live independently.
Under the revised statute, a nonprofit PACE provider has to submit a conversion plan to the state attorney general.
InnovAge is the first nonprofit in Colorado to try to convert to for-profit.
Critics of the conversion, who contend that InnovAge played a significant role in , say the move lacks transparency and oversight, and they fear it could result in a decline in care that puts elderly patients at risk.
“It may consider patients second and profits first,” said Edwin Kahn, a private practice lawyer who is cooperating with the Colorado Center on Law and Policy, which has filed public comment with the state attorney general’s office expressing concern about the conversion.
Other organizations that have filed comments with the state include the , and the .
Feeley said InnovAge will continue to operate within the framework of PACE. “It ensures that there is a continuing level of quality,” he said. “If there isn’t, we’re out of business.”
The CCLP, which acts as an advocate for low-income Colorado residents, says it has three chief requests:
• If the transaction is found to be in the public interest, that there be independent monitoring conducted after the conversion.
• That proceeds from the acquisition be transferred to an independent foundation with a track record in community health, not a foundation with minimal experience and board members connected to InnovAge.
• That the valuation of InnovAge be scrutinized.
A complaint filed by the Colorado Cross-Disability Coalition claims that InnovAge should have a value of $303 million, not the $186.4 million of the acquisition bid.
InnovAge disputes that allegation and says the valuation and bids from interested parties are aligned with the final offering price.
The conversion plan, financial documents and public comments are available on the Colorado attorney general’s . The public hearing is scheduled from 6 to 8 p.m. Thursday at the Ralph L. Carr Justice Center, 1300 Broadway.
The public comment period extends through 5 p.m. Jan. 8.
Alicia Wallace: 303-954-1939, awallace@denverpost.com or @aliciawallace
