- Upper Valley Services, Inc., White River Junction, VT
- Lincoln Street Inc, Springfield, VT
Please note that all data below was derived from the collaboration's nomination for the Collaboration Prize. None of the submitted data were independently verified for accuracy.
ARIS was formed in 1996 by the two member corporations, Upper Valley Services (UVS)and Lincoln Street Inc.(LSI). LSI and UVS, both small organizations serving people with intellectual disabilities, came together at a time when the State of Vermont was facing a severe budget crisis. Looking at the reality of significant budget cuts, and the effects these reductions would have on essential programs and services to vulnerable population, the two partners came together to form a third corporation, Area Resource for Individualized Services (ARIS). The main purpose of this Corporation was to provide both members with the business and administrative services that previously had been provided by each organization individually. The formation of ARIS enabled both organizations to absorb the budget cuts without bringing serious harm to the services and supports being provided to the consumers of each agency. While not being formally connected prior to 1996, both LSI andUVS had a close working relationship and shared common core principals and values. As small organizations, both were feeling vulnerable as possible targets of takeover by much larger organizations. The formation of ARIS has provided long term stability along with opportunity for growth.
ARIS has grown since its inception as a small shared business office between two non profits. As of 2010, ARIS is a corporation that continues to provides business office services to the two member corporations and to an additional six contractual partners in Vermont and New Hampshire. The contractual partners are all small organizations focused on service provision to persons with disabilities. All organizations were also experiencing financial difficulty that had the potential to threaten their existence.
ARIS also now provides Fiscal Intermediary services to the State of Vermont, serving as a payroll service for approximately 4,000 Vermonters. These 4,000 Vermonters employ approximately 11,000 support workers to enable them to live more independent lives.
The management structure was determined by several key factors, the first and foremost being the shared values and visions of the two member organizations. UVS and LSI share a unique culture, from the Boards of Directors to the Executive Directors. From the beginning it was important to develop a corporate structure and common management that assured equal representation of both members. ARIS' Board of Directors is comprised of an equal number of Board members from LSI and UVS, and the Executive Directors of UVS and LSI are the Co Executive Directors of ARIS. This is important because both member partners believed there needed to be equal representation in decision making rather than having an imbalance due to factors such as size of budget. It was equally important that ARIS be governed by a Board and managed by Directors who understood and were committed to the vision and principles of the members. We did not want to simply create a new organization. We wanted to also assure a structure that would maximize the support role the new organization would have well into the future.
The management structure allows for common management to purchase health insurances for employees of LSI UVS and ARIS, while all three corporations maintain their separate corporate identities and functions. All business office functions are provided by ARIS. Among the significant results of this collaboration has been a sizable reduction in the amount of dollars committed to administrative functions. This enables a higher percentage of funding to be directed to the individuals served by the member and contractual partners.
The primary challenge that was experienced was managing the initial change process of moving business functions and offices to a physical space that was geographically central to both member corporations. From there, most of the challenges were related to developing new relationships that were so essential for success. As ARIS stabilized in its new role, the partner organizations were similarly able to adjust to the new operating requirements and procedures. As we worked through challenges we sought technical assistance as needed. We also took great care as positions were hired to assure that personnel had the necessary skill sets to perform required duties. Satisfaction surveys were utilized as part of a continuous quality improvement effort to increase efficiency and effectiveness.
The impact of the development of ARIS has been dramatic in several areas. First, it has protected vulnerable individuals from budget reductions to direct support services. The ARIS collaboration has been the stabilizing factor that has enabled six small Vermont based corporations serving vulnerable individuals to survive and prosper in times of significant economic challenge. Between 1996 and 2009, administrative rates have been decreased significantly with more than 14 million dollars not being spent on administrative functions. Services to vulnerable Vermonters' have been greatly enhanced as a result of this structure.
ARIS now has two distinct departments, the Agency financial side continues to support the business office functions of the corporations mentioned above. ARIS also functions as an Intermediary Services Organization. The State of Vermont contracts with ARIS for fiscal intermediary services for several programs serving more than 4000 vulnerable Vermonters.
Outcomes of the effects of the collaboration are measured by the fiscal health of the ARIS corporation, as well as the fiscal health of the member and corporate partners. This is accomplished by monthly financial reviews of each partner by their individual Boards with the participation of ARIS. Independent audits are conducted annually and all audit recommendations are incorporated into operating procedures. We also utilize satisfaction surveys along with the conclusions reached during State quality review activities.
Looking at all of the outcomes, we have learned that a collaboration such as the development of ARIS can stabilize fragile organizations and assist in their growth, even in difficult financial times. All partners have experienced significant cost savings as a direct result of this collaboration. Additionally opportunities for future growth have become much more easily accessed. As ARIS has its exclusive focus on administrative aspects it has become extremely efficient. This in turn, has increased the ability of the partners to focus more of their energies on their core missions.
The ARIS model allows both members and other partners to retain their unique and individual cultures and corporate identities while gaining substantial security, stability, and sustainability.
The ARIS model has literally saved millions of dollars in administrative expenses through efficiencies and kept that funding at the consumer direct service level. These savings are achieved through standardization of processes and spreading administrative costs over a greater number of smaller agencies. Each and every agency that contracts with ARIS experiences an immediate and substantial cost savings. Historically each of these agencies had employed their own business offices usually consisting of 3 to 4 FTE’s depending on their size. The Agency administrative rates prior to contracting with ARIS averaged 16.18 %. Today our agency admin rates for these same agencies average 7.10%. Extrapolated over the last 13 years these administrative savings have (cumulatively) equaled over $14 million dollars that have been put back into services for consumers.
How do we do it? It has been shown that each of these like agencies did not need their own business office. As this model has proven one business office can be utilized much more effectively and efficiently. ARIS employs one (1) payroll clerk that provides payroll services to 9 separate contracted agencies. ARIS employs four (4) bookkeepers to provide all bookkeeping related services to all 9 separate contracted agencies. Each bookkeeper has at least 2 agencies that they are responsible for with room to expand. ARIS employs one (1) billing clerk who spends approximately 50% of her time billing on behalf of these contracted agencies. ARIS employs (1) controller and (1) CFO whose time is spread across each of these contracted agencies.
Another key advantage to the ARIS model is that the Executive Directors of these agencies are no longer required to supervise an entire business office, thus allowing them to focus on the true missions of the agencies. The Executive Directors of each agency as well as the respective Boards of Directors receive detailed financial presentations and information on a monthly basis. They also have immediate access to the ARIS leadership at any time.
At ARIS we are continuing to research and explore ways to bring more efficient services to our agencies. Recently ARIS purchased telecommunications equipment and assisted each of the agencies in purchasing this equipment as well. Now each agency is able to connect with ARIS or each other in order to facilitate meetings or trainings without the burden of travel time or expenses. This is a substantial advancement given that our contracted agencies are spread all across the State of Vermont. Using this system the savings in time and dollars provides an enormous benefit to ARIS and all of its partnering agencies. ARIS is also currently in the process of implementing a new accounting and payroll software system. This system will be much more interactive for the Executive Directors as they will have the ability to access their financial information via the web and will have “drill down” capability to see the granular detail making up the financial information.
All partnering agencies have been encouraged to utilize the same banking institution and they have chosen to do so. This enables strong relations between ARIS and the banking institution (along with partnering agencies) ensuring that the banking institution has a high level of knowledge about the mission, structure, and needs of ARIS and all of its partners. The uniformity of products, reports, and information contributes to the ongoing efficiencies that have been created. Each agencies accounts are of course kept separate, however, the fact that all agencies use the same banking institutions has given ARIS added leverage when negotiating for better rates and lower costs for the services that the banking institution provides.
In addition to banking, each member agency is also encouraged to use the same auditing firm, which they have chosen to do. As all of the auditing records are maintained at ARIS, this gives the auditing firm the ability to coordinate the audits of all partnering agencies within a single time frame. This makes the auditing process extremely efficient and far less costly for all organizations. ARIS' business is providing financial support services. Consequently ARIS understands very well the importance of accurate and detailed financial records. Consequently, each partnering organization typically receives a timely and clean audit opinion. This strengthens the ongoing relationships with the governmental funding sources that supports each organization.
With the formation of ARIS, a highly focused and efficient administrative support organization was created. While the initial intent was to form a single business office to support two small non-profit organizations, between 1998 and 2004 four additional small Vermont non-profits forged contractual relationships with ARIS for their business office services as well. In 2009 a small New Hampshire based non-profit elected to contract with ARIS for these services as well. Each of these additional partners were experiencing differing degrees of financial difficulty prior contracting with ARIS. At this time all of the partners are financially stable, even in the midst of the worse economy since the great depression.
As ARIS demonstrated its effectiveness with proving highly efficient administrative support services, others opportunities became available for ARIS to grow. The first opportunity was to assist the State of Vermont to empower people with disabilities and their families to direct some or all of their own care, rather than needing to rely on organizations or in some instances facility based care. Mechanisms were created to enable individuals and families to employ their own direct care assistants. However, this meant that these persons were now becoming employers of record with all of the legal responsibilities that comes with this distinction. What was needed was an organization that could act on the behalf of all these new employers by managing their payroll and also manage all of the legal requirements (both State and Federal)that all employers must follow. These requirements include the actual payroll, Federal and State tax withholdings, garnishments, tax form 941 filings, W-2 and 1099 processing, workers comp and unemployment payments, and five different background checks on each worker hired. In addition, most of the funding that makes it possible for people to hire their own workers come via Medicaid. The Medicaid rules are extremely complicated requiring detailed and precise records, far beyond the ability of most family employers to manage. Medicaid also requires substantial cash flow capacity along with a sophisticated billing component.
The momentum to increase the amount of choice that people have over their lives has steadily grown in Vermont. ARIS has been a key part of making this growth possible by becoming the mechanism that takes what otherwise would likely be an impossible administrative burden off the shoulders of employers. Currently there are more than 4000 individuals all across the state of Vermont who hire their own support workers. This has enabled many people to remain in their families, and in their own homes with a much higher degree of freedom and independence than what otherwise would be possible.
As noted, the initial motivation for the collaboration was based in the belief that two organizations could come together and share resources that would result in significant administrative efficiencies. Such efficiencies would have a protective effect for the very vulnerable population each agency was serving. During the time that this collaboration was being planned, there was considerable fear in Vermont that the state would move to use large managed care organizations as a means to drive down costs. Vermont was experiencing at the time fairly large budget pressures and was taking steps to reduce its spending, particularly in the human services arena. Budget reductions of 6% had been announced, and this loss of funding, without some creative planning, would have had serious negative effects on the lives of the people each agency was supporting. Actually serious levels of service reduction did in fact happen all across the state of Vermont when these budget reductions went into effect. Significant service reductions did not happen at Lincoln Street (LSI) and Upper Valley Services (UVS) and this was directly attributable to this collaboration.
When the Executive Directors of LSI and UVS began talking about sharing administrative services, an early meeting with the Presidents of the respective Governing Boards was arranged to see if the Boards would support the effort going forward. With this green light, the two Directors began the planning in earnest. The two most important principles that were agreed upon were full equality in the relationship, and no loss of corporate autonomy and identity. The main short term goal to be achieved was to create a structure that would protect the levels of service being provided by LSI and UVS against the effects of large budget cuts. The primary longer term goal was to create a structure that would be able to grow and diversify in order to enable LSI and UVS to have increased protection from outside threats by being part of a larger organization.
After a period of study and consultations the plan to form a membership corporation was agreed upon. The principle of equality was satisfied by establishing in the By-laws of the new corporation that equal numbers from the Boards of LSI and UVS would serve as the Board of Directors for the new corporation. Secondly the decision was made to have the Executive Directors of LSI and UVS serve as the Co-execs of the new corporation. The principle of maintaining LSI's and UVS' corporate autonomy and identities was preserved as there was no changes made to their respective structures with the exception of locating all of their business office functions within the structure of the new corporation. With the ratification by LSI's and UVS' respective Board of Directors, the ARIS collaboration was born in November of 1996.
Since its inception ARIS has grown significantly. With a relatively small staff. ARIS provides fiscal management and support to its two member organizations, to several thousand individuals employing their own support staff, to several programs of the State of Vermont, to a statewide, self-advocacy group, and to five small non-profit organizations serving persons with disabilities. Presently ARIS has responsibility and accountability for more than 80 million dollars on an annual basis. Over the years ARIS has become increasingly effective and efficient. The initial management structure is fundamentally unchanged although staffing certainly has grown to keep up with the increased volume of work (5 staff in 1996, and 25 staff today).
The main "bumps in the road" occurred early on and were in two difference but interrelated areas; operational procedures, and forging and maintaining new relationships. There were many logistics that needed to be figured out, that in the beginning did not always work well. For example, the simple process of getting staff timesheets (from the member corporations) to a somewhat distant business office was not as easy as it seemed it would be. Being funded by Medicaid the rules required original timesheets be retained (thus eliminating faxing etc.). Mail delivery was relied upon, but the internal handling of a very large volume of paper (by only a few people) was very complicated to figure out. Another example of a bump was the Medicaid billing requirements for the payroll support program described earlier. At one point ARIS was tested by the cash flow requirements of a large payroll. It was necessary for us to design and write unique software in order to manage within the "no little errors allowed" environment of the Medicaid program. For a time our accounts receivable balances were very high. That problem, thankfully is long behind us.
While LSI and UVS, along with their leadership were well know to the State of Vermont (the primary funder of the services provided by LSI and UVS), ARIS and its unique structure was of course an unknown. It takes a while for strong and trusting relationships to be forged and this was certainly true with this collaboration. Some of the "bumps" described above impeded the development of these relationships as well. Overtime, however, as ARIS matured as an organization, so did the relationships that were so essential. ARIS is at this time a well known and respected organization that is relied upon by many. This is supported by the tracking components including formal satisfaction surveys, excellent audits, strong balance sheets of ARIS as well as the agencies that ARIS supports (including strong days of net assets, and strong days of cash on hand), well developed internal controls, and administrative rates that are among the lowest in Vermont. Another less formal but significant indicator is the manner by which ARIS continues to grow. With few exceptions, the growth opportunities at ARIS have occurred as a result of ARIS' reputation. ARIS has not sought out much of its business, rather it has grown as a result of the business opportunity seeking ARIS.
To close, thank you for the opportunity for us to share the ARIS Collaboration story with the Collaboration Prize.