---
type: claim
domain: health
description: "For-profit organizations entering PACE market in 2025 bring capital and operational scaling capacity, suggesting capital availability—not model viability—has been the binding constraint on PACE scaling"
confidence: experimental
source: "NORC at the University of Chicago, PACE Market Assessment Final Report, March 2025"
created: 2025-03-17
---

# For-profit PACE entry in 2025 signals capital availability inflection for full-risk integrated care

For-profit organizations are beginning to enter the PACE market, bringing capital and operational scaling capacity that the historically nonprofit, mission-driven PACE sector has lacked. This coincides with PACE's fastest growth year (12% in 2025), suggesting that capital availability—not model viability—has been the binding constraint on PACE scaling.

PACE's 50-year history as a nonprofit-dominated sector reflects its origin serving vulnerable populations (nursing-home-eligible seniors) under full capitated risk. The capital requirements are substantial: PACE centers require physical infrastructure, integrated care delivery teams, and the financial reserves to manage 100% risk for the costliest Medicare/Medicaid beneficiaries.

For-profit entry creates tension with PACE's mission-driven origins but may unlock the capital needed to test whether full-risk capitated care can scale beyond 0.13% Medicare penetration. The timing—2025, as value-based care rhetoric reaches peak saturation—suggests that capital is finally willing to test whether the attractor state economics work at scale.

## Evidence

- NORC (2025) reports for-profit PACE programs beginning market entry
- 2025 enrollment growth of 12% (9,765 new enrollees) is fastest in recent years
- Historical PACE sector dominated by single-state nonprofit operators
- Capital requirements cited as primary scaling barrier: large initial investment for centers and care infrastructure
- Most parent organizations operate single program in one state, limiting economies of scale

## Mechanism: Why Capital Was the Constraint

For-profit entry addresses three specific barriers that nonprofits could not overcome:

1. **Capital access**: For-profits can raise equity and debt at scale; nonprofits rely on grants and retained earnings. PACE's 50-year nonprofit dominance reflects the difficulty of accumulating sufficient capital through mission-driven channels.
2. **Multi-market operations**: For-profit structures enable cross-state expansion and shared infrastructure; most PACE operators remain single-state because nonprofit governance structures lack incentives for geographic expansion.
3. **Operational scaling**: For-profit management brings systems for replicating operations across geographies—a capability that nonprofit PACE operators have not demonstrated at scale.

## Risk: Mission Drift

The risk is that for-profit incentives conflict with PACE's vulnerable population focus, potentially leading to cherry-picking (enrolling healthier dual-eligible seniors) or cost-cutting that undermines care quality. The 2025-2027 period will test whether for-profit PACE maintains model fidelity while achieving scale. If for-profits cherry-pick, PACE's clinical outcomes advantage may erode, and the model's scaling inflection may prove illusory.

---

Relevant Notes:
- [[pace-serves-90k-enrollees-after-50-years-demonstrating-structural-barriers-prevent-full-capitation-scaling]]
- [[value-based-care-transitions-stall-at-the-payment-boundary-because-60-percent-of-payments-touch-value-metrics-but-only-14-percent-bear-full-risk]]
- [[the-healthcare-attractor-state-is-a-prevention-first-system-where-aligned-payment-continuous-monitoring-and-ai-augmented-care-delivery-create-a-flywheel-that-profits-from-health-rather-than-sickness]]

Topics:
- [[domains/health/_map]]
