Affiliation Business Plan
April 2012
I. Executive Summary
The Florida Alcohol and Drug Abuse Association (FADAA) and Florida Council for
Community Mental Health (FCCMH), two member associations representing behavioral
health services providers throughout Florida, have engaged in dialogue to define how a
more tightly aligned, integrated association can improve services to members while teaming
to both provide value added benefits and enhance the overall financial strength of a
combined/consolidated entity. The organizations’ leadership has insisted on maintaining
parity and equity throughout the deliberations, as well as, in the recommended
organizational solution. Clearly, the driving force in the discussions has been to sustain, if
not develop, enhanced member services and related initiatives that will best meet the needs
of the current and future members served by FCCMH and FADAA. In addition, it is
imperative that the associations seek to achieve rational cost savings, improve overall
organizational performance, and capitalize on future member dues as they seek to sustain
their commitments to members.
This business plan is the result of continuous, collaborative and mutually supportive
dialogue over the past year. It includes the recommendation to proceed with a full asset
merger, based on multiple, complementary objectives from both FADAA and FCCMH. In
addition, the plan presents an initial range and scope of services to be provided by a new,
consolidated entity, as well as the expected revenue and cost impact.
Finally, upon acceptance of this plan a detailed merger implementation/action plan will be
developed to guide the transaction to completion.
II. Introduction
The Florida Council for Community Mental Health (FCCMH) is a statewide association of
70 community-based mental health and substance abuse agencies.1 The association’s
membership includes “traditional” CMHCs, agencies that specialize in substance abuse
services and children’s services, as well as hospital-based programs.
Each member agency is a private corporation, generally with a volunteer, citizen board of
directors who are representative of the local community. These boards set policy for the
agencies and serve as vehicles to assure that community treatment needs are being met.
FCCMH agencies receive funding from local, state and federal governments, as well as
organizations such as the United Way and private foundations to supplement services
rendered to clients who are largely low-income individuals and families.
Council members serve the majority of the nearly 240,000 adults and children receiving
publicly-funded mental health and substance abuse services in Florida. Most clients served
by member agencies are adults with serious and persistent mental illness, children with
severe emotional disturbance, adults with long-term addictions, and children who are drug
users or at risk of abusing drugs. Member agencies provide a range of services, including
1
Adapted from information found on FCCMH’s website, www.fccmh.org/about/
emergency services, residential treatment, outpatient services and rehabilitation and
support services. These services are provided by a combined workforce of several thousand
professionals.
The Florida Alcohol and Drug Abuse Association (FADAA) is a non-profit membership
association representing over 100 of Florida’s premiere community-based substance abuse
and co-occurring treatment and prevention agencies, managing entities, community antidrug coalitions and over 3,000 individual members.2 Throughout its history, FADAA has
been involved in leading industry change to better serve consumers and communities and
has been at the forefront in creating responsive systems and tools to facilitate the transfer of
evidence-based practices to the field and to initiate and expand continuous quality
improvement activities.
FADAA is perceived as the “lead voice” by national, state and local policy makers,
providers and the recovery community on substance abuse policy and related practice
improvement. FADAA’s extensive portfolio of activities includes hundreds of training and
technical assistance events. FADAA’s board members and staff constantly monitor and
address policy issues related to emerging trends that impact substance abuse and cooccurring service delivery in areas including but are not limited to healthcare reform,
prevention, child welfare, criminal justice, veterans’ and their families, workforce issues,
business and private sector changes and cultural diversity.
In fall 2011 Health Planning Source, Inc. (HPS) was engaged to assist the FCCMH and
FADAA Boards with an assessment of formal affiliation and the development of a plan for
affecting a transaction. Led by a Steering Committee comprised of five Board members and
the chief executive from each association, participants in the process identified several
potential advantages to affiliation of the two organizations including:
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Eliminate “competitive” advocacy – Although FADAA and FCCMH have recently
worked more collaboratively to affect policy and advocacy, they had historically
conducted such activities from their own “camps”, often forgoing mutually beneficial
positions vis-à-vis lobbying and policy development. A formal, tightly organized
affiliation will essentially eliminate competing agendas and effectively consolidate
behavioral health advocacy work into a stronger, more sustainable voice on behalf of all
providers in the State.
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Develop stronger, more relevant advocacy and policy positions – It follows then that a
more tightly affiliated/merged association for behavioral health providers will be able to
develop policy and advocacy positions that are more contemporaneous and relevant to
current and near-term issues, rather than continue to “chase” legislative misses and past
funding shortfalls. In fact, a consolidated front may result in stronger alliances with
other health services providers thereby affording positions of strength for FADAA and
FCCMH members relative to their peers.
Emerge as a leader of/for industry integration at state and local levels – Directives and
proposed mandates from Washington (including the Patient Protection and Affordable
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2
Adapted from information found on FADAA’s website, www.fadaa.org/overview.php
Care Act, or ‘health reform’) are forcing providers of health and health-related services
throughout the country to evaluate strategies for better serving their communities and
remain viable, if not relevant. More progressive systems are deliberately moving to
consolidate and integrate an entire continuum of facilities, agencies and services. This
phenomenon is affecting community-based behavioral health providers as they seek to
redefine their roles in the development and provision of services. Many are merging
with one another, often with historically dissimilar bases of service, markets, financial
performance, etc. to offer a stronger product to communities. Many are subsequently
(and/or also) merging with entities providing physical health services (e.g., community
health centers and federally qualified health centers) to provide broader continua of
care. Still others are affiliating with payors and insurers thereby tightening the supply
chain for prospective purchasers of care. FCCMH and FADAA are proposing to achieve
the same end—and serving as a potential facilitator for organizational evolution for their
member agencies.
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Create an organization responsive to the expected consolidation of funding streams –
A fundamental goal of health reform is cost reduction. This in turn will likely result in
shrinking reimbursements for all providers. Couple that with continued budget
concerns at the State level and the industry is unfortunately poised for further payment
cuts. Therefore, rather than be victim to the declines in, in essence, two major funding
streams (mental health and substance abuse), a combined association will be better
positioned to mitigate the likely emergence of rationalized payments to providers.
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Achieve greater visibility in the health services provider community – It is FCCMH
and FADAA leaders’ belief that, as the industry consolidates segregated, smaller
association platforms will work against the members they represent. Larger
organizations (membership, trade, provider, etc.) will invariably have greater clout, not
only with respect to future payment, but also development and distribution of services,
recruitment of talent, and stronger performance. An affiliated FADAA and FCCMH can
serve to “level the field” somewhat relative to the emerging provider systems’ and payor
networks’ own advocacy organizations. Moreover, a united front in Tallahassee can
have an impact on members’ visibility in their own communities.
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Achieve operational economies while enhancing core member services – A primary
objective of the FCCMH and FADAA affiliation is better, more efficient use of resources
combined with the opportunity to add or expand services. As will be seen below, a first
draft of pro forma income statements does not yield overall savings upon
implementation of a merged entity. Nearly all of the additional estimated expense is the
result of expected new hires to enhance member services and grow the new association.
Plans are that services can be improved—the result of the merger of assets and
revenues—which neither association likely could accomplish on its own. Management
has identified some savings in corporate overhead, redundant positions, real estate, and
communications, among others. Moreover, economies can be gained once a new
association is fully staffed. The benefit for members will be access to a deeper pool of
talent and more effective execution of core services.
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Increase member value for dues expended – As alluded above, overall expenditures are
expected to increase upon implementation of a new association. However, leadership
believes that by leveraging the full assets of a new entity (talent, depth, clout, etc.)
members will experience greater value for dues expended. It is understood that, based
on the current combined membership of FADAA and FCCMH (in other words, absent
membership growth), it will be necessary to increase member dues. It is anticipated,
however, that a new association will be better able to attract additional sources of
revenue (for instance, from vendors, MEs, managed care organizations, other
professional associations, grants) to offset large dues increases.

Emerge as a leader in the “redefinition” of behavioral health – There is strong belief
that FCCMH and FADAA should assume a much stronger position with respect to
identifying and articulating the role of behavioral health in the future delivery system.
Consolidating the substance abuse and mental health messages in Florida can only
enhance members’ collective opportunity to remain relevant as new models of care
delivery and payment evolve. Further, it is expected that achieving consensus around
behavioral health’s role can only enhance its position with respect to large provider and
payor networks.
Of the many reasons to affiliate, most pressing include the desire to better serve members
and leverage strengths to deal with expected funding decreases. With that in mind,
leadership articulated the following objectives for affiliating:
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Integrate and improve behavioral health services to and in communities served,
Enhance members’ competencies to deliver effective service,
Defend, if not grow, funding to support members’ ongoing operations,
Assist members with the ability to withstand reductions in funding,
Sustain political and economic influence at state and national levels,
Encourage meaningful member-to-member dialogue,
Seek to achieve and communicate consensus on key issues,
Defend against external threats (to members and the industry),
Develop coalitions with other associations,
Better respond to the integration of health care and social services, and
Provide resources for improving members’ performance.
As discussions progressed, however, there were concerns expressed by leadership regarding
the planning for and implementation of a combined FCCMH-FADAA, including:
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Timing and the risk that merger/affiliation will distract from addressing other key
issues, such as the need to stay focused on ongoing budgetary, legislative and
departmental (DCF) concerns; expected and planned management transitions; and, the
need to readdress several members’ own strategies as the environment changes.
Association to association equity in a transaction and the capital contributions that may
be required versus assets that may be withheld to achieve parity in a new entity.
The potential for significant disruptions in day to day operations and abilities to sustain
effective policy and advocacy agendas.
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Potential confusion and dissatisfaction with the expected roles and responsibilities of
senior leadership (addressed below).
A potential disconnect between planned-for value added services and the anticipated
need for increased dues.
The absence of clearly defined operating efficiencies and cost savings.
A perceived cultural and social chasm between the two associations, based not only on
differences in core services provided but also other attributes that tend to differentiate
FCCMH and FADAA members, such as size (smaller v. larger), scope of service (single
service v. comprehensive), geography (North v. South Florida, urban v. rural) and
relationships to other State agencies (DCF, Justice, Corrections). In addition, trust and
member-to-member socialization emerged as potential deterrents to an affiliation.
While concerns and shortcomings are consistently recognized in affiliation dialogue, it is
imperative in the conversation and deliberations that FADAA and FCCMH retain a level of
parity. In other words, it is important that neither organization assumes a position of
dominance at the expense of the other, including governance representation, financials and,
to the extent possible, management representation in a future entity.
FCCMH and FADAA leadership considered the benefits and risks of alternative forms of
affiliation. Three were given consideration, including:
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Joint operating company—in which each predecessor organizations retain ownership of
their assets but operations are consolidated and governed by a third board;
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Management agreement—in which one entity assumes management of the other while
reporting to that entity’s board; and,
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Merger—in which the organizations consolidate assets, services, management functions
and governance.
Each alternative was considered briefly and management debated the merits and drawbacks
of each model. During the course of conversation it was concluded that the joint operating
company model would likely not result in the longer term benefits each organization is
seeking and could provide the perception that either association could exit the venture with
relative ease. The management agreement option was attractive, if only because each entity
would retain ownership of its assets without committing to a structure that will be difficult
to unwind in the event initial goals of the affiliation are not met. At the same time, the
management agreement limits the opportunity to fully consolidate and integrate services
and management functions.
Leadership determined that the most appropriate and efficacious way to achieve stated
objectives is to merge the two organizations and form a new entity. Therefore, the goal of
this plan is to outline the details of a merged entity, Substance Abuse and Mental Health
Association, or SAMHA (name to be determined), including its proposed organizational
structure, key services and estimated financial performance.