St. Dismas Assisted Living Facility—1 St. Dismas Medical Center, an urban, nonpr

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St. Dismas Assisted Living Facility—1

St. Dismas Medical Center, an urban, nonprofit, 450 bed rehabilitation hospital began to

see a significant decline in admissions. St. Dismas' mission focuses on inpatient and

outpatient rehabilitation of the severely injured and catastrophically ill. While the patient

census varied from month to month, it appeared to the St. Dismas Board of Trustees that

the inpatient population was slowly but steadily declining. The hospital's market

researchers reported that fewer people were being severely injured due to the popularity

of seat belts and bicycle/motorcycle helmets. In order to get a handle on the future of the organization, the Board, and theCEO, Fred Splient M.D. called for a major strategic

planning effort to take place.

In January 1999, St. Dismas held a planning retreat to identify future opportunities. The

outcome of the retreat was that the Medical Center needed to focus its efforts around two major strategic initiatives. The first, a short run initiative, was to be more cost

effective in the delivery of inpatient care. The second, a long-run strategy, was to develop new

programs and services that would capitalize on the existing, highly competent rehabilitation therapy staff and St. Dismas's excellent reputation in the region.

At the time of the retreat, Fred Splient's parents were living with him and his family. Fred

was an active member of the “sandwich generation.” His parents were aging and

developing many problems common to the geriatric populace. Their increased medical

needs were beginning to wear on Fred and his family. It crossed Fred's mind that life

might be more pleasant if the hospital Board approved an expansion of the Medical Center's campus to include an assisted living facility.

In March 1999, Fred had his Business Development team prepare a rough estimate of the

potential return on investment of an assisted living facility. He asked the team to identify

different options for facility construction and the associated costs. The team also did a

complete competitive analysis and examined the options for services to be offered based

on St. Dismas's potential population base and catchment area. The Business Development

team visited several facilities across the country. The team also interviewed companies

that could oversee the design, building, and operation of the facility for St. Dismas. The

development team produced a preliminary business plan based on the recommended

structure for the facility, estimated capital expenditure needs, estimated income from

operation of the facility, as well as projected revenues to other Medical Center programs

resulting from the facility's population.

The plan was presented at the May 1999 meeting of the Board of Trustees. Fred Splient

and his team introduced the Board to the concept of opening an assisted living facility on

St. Dismas's campus. The facility would be set up as a for-profit subsidiary of the Medical Center so that it could generate a profit and not be subjected to the strict guidelines of the hospital's accrediting agencies. As a subsidiary organization, however, the Board would still have control.

The chosen facility design was a freestanding apartment-

like facility with a sheltered connection to the Hospital for access to the kitchen and hospital services. The facility would have 100 units with 15 to 30 of the units classified as “heavy-

assisted” and built to code to house the physically and medically disabled. The rest of the units would be “light-assisted,” larger apartments. The population would be approximately 110 to 150

residents, with most being single occupants rather than couples.

The light-assisted apartments could hold residents who required only minor medical and

socialinterventions. The residents of the heavy-assisted section would have more medical

needs and would require assistance getting around. The Business Development team

recommended this type of programming model, because many assisted living facilities

were erected across the country, but few had a medical focus and offered the types of

services that St. Dismas could offer—physical and occupational therapy programs, and

behavior management programs to name a few.

The Board was assured that the facility would meet the strategic initiative of a growing

business. The business plan projected an immediate increase in the number of referrals to

the outpatient therapy programs. Another projected deliverable of the project was to

enable St. Dismas to strengthen its focus on reimbursable preventive and wellness

programs for the healthier geriatric population. The project's longer term goal was to

increase the census in the hospital's inpatient units by having a location where people

could age in place until they were in need of hospitalization, and then such a facility

would be right next door.

Depending on the exact size of the apartments, their equipment, and the actual ratio of

heavy-to light-assisted units, Fred estimated that the entire project would cost between

$8,500,000 and $11,000,000 for the facility construction. That estimate included the cost

of land, furnishings, and a sheltered connection to the hospital. When up and running, it

was estimated that the net income would range between $9,000 and $12,000 per un

it per year. The team estimated the net cash flow for the entire project to be around $1,500,000

per year.

Fred requested the Board to approve the concept and allow his team to prepare a pro

forma plan to the Board for approval. The plan would include a recommended design for

both heavy-and light-assisted apartments. It would also include all costs of land,

construction, furnishings, and staffing. Income estimates would be included and would be

conservatively biased. A timetable would also be included.

The Board conducted several executive sessions, and by the middle of May voted to

approve the concept. They approved the architectural-construction-

management firm recommended by the team, and they requested Splient to proceed with developing a complete project plan. The Board appointed two Board members to sit on Fred's planning group.

In June, Dr. Splient gathered his executive team together and presented the project

mission, and scope. He reported that the board had approved a small budget to finance

the planning process. The Board also stipulated that construction could not begin until

after the November 1999 city elections because two of the Board Members were running

in that election, one for a city council seat and one as a county commissioner. The Board

also stated that they would like a plan that would allow the facility to open by July 2000,

as research has shown that many adult children find the summer the easiest time to assist

their parents in finding an alternative to independent living arrangements. The CEO and

executive team were now confident that they were ready to launch the project to plan,

build, and open an assisted living facility at St. Dismas.

A few days later, Fred decided that it was time to set up the team that would take

Responsibility for what he called the ALF project. He quickly decided to include the

following staff at the launch meeting:

Chief Financial Officer (CFO)

Vice President of Business Development and Marketing

Rehab Services Medical Director

Construction Project Manager for capital facilities projects

Chief Operations Officer (COO) (nursing, facilities, food services, and

housekeeping)

Director of Information Services

Director of Support Services (central supply, purchasing, and security)

Two members of the Board of Trustees, one with construction experience and the

other a probable electee to the city council.

Even though the department directors from Support Services and Information Services

would not be involved until later, Fred decided to include them from the beginning. Fred

knew some members of his team had a tendency to become obstacles to progress if they

felt left out.

Fred named the group the ALF Project Steering Committee and held the first meeting.

Fred presented his vision for the facility. He told the group that he personally would be

managing this project. He led a discussion of all the major steps that must be included in

the project plan, and asked each team member to identify the areas for which they would

accept responsibility. The hospital's Construction Project Manager took responsibility for

the construction of the facility, and the COO volunteered to oversee the building design,

as well as define the needs for food services, housekeeping, staffing, and policy and

procedure development. The CFO agreed to develop the budgets for each area of the

project as well as the operating budget for the facility. The CFO also agreed to create the

payroll and accounting systems necessary to operate the facility.

The IS director accepted responsibility to define and set up all the telecommunications

and information system needs of the facility. The VP of Business Development agreed to

create a preliminary marketing plan, and a communication package for the community

and hospital staff. In addition, she discussed organizing a major ground breaking event.

The Medical Director said that he would design an assessment tool for determining

residents' level of medical needs upon moving in to the facility. He felt this was the first

step in defining what clinical services should be offered to residents. Fred told the team

that he would develop the management structure for the new facility and work with in-

house counsel to identify all governmental regulations as well as all industry standards

that pertain to an assisted living facility and govern the facility's practices. Splient gave

the team two months to come back with their detailed action plans for their areas of

responsibility.

St. Dismas Assisted Living Facility case study. Think about the attributes of the St. Dismas project and how they may impact how the project is approached and managed.

Question:

Explain how you can use the project profile for risk management in your project plan.

Explanation / Answer

Management of risk is quite important as well as challenging for the business organization. While, formulating a plan one must try to set the plan for risk minimization in terms of physical risks, legal risk as well as financial risks. Now, we shall consider the role of project profile in maintaining the project risks in the following manner:

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