Phil Kay lor June 3, 2003 Longevity Healthcare Systems, Inc. The Longevity Healthcare Systems began in 1972 and had prospered in their twenty years. They had acquired twelve nursing homes, two subacute care facilities and a pharmacy in Michigan, and seven nursing homes in Ohio. Although they were having profitable years, owner, Kathryn Hamilton had some concerns: .
The Ohio nursing homes were showing unprofitable results... Aggressive competition. Health Care Reform. Need more private paying customers After reviewing the company data collected, she decided that the first step would be to create an updated Mission Statement. This would enable the employees to have a clear understanding of the company's purpose. Their new mission statement would be - Longevity Healthcare Systems, Inc (LHSI) is dedicated to the highest quality of customer satisfaction by providing quality affordable health care.
The market for healthcare is rapidly growing. "In 1993, one out of every seven dollars that American's spend is to purchase health care. Analysts are projecting that expenditures will increase from $585.3 billion in 1990 to $3,457.7 billion in 2010. That is an annual growth of over nine percent". Longevity's target market is the aging population and their families located in their existing demographic areas.
To increase LHSI's profits they must target the most profitable nursing care services. Medicare, Medicaid, and health insurance companies are continually looking for ways to lower health costs. One way they have cut costs is to shorten the amount of time patients can stay at the hospital and receive therapy treatments. In 1990, LHSI opened up a subacute care facility in Grand Rapids that showed good profits for them. The first objective would be to turn the seven Ohio nursing care units to a profitable business. Mrs. Hamilton realized that the families of the Toledo residents were commenting on the value, quality, and cost of nursing homes.
She decided to hire a marketing executive and administrator to cover this business unit. They decided to turn four of the largest homes into half nursing care and half subacute units. The costs of renovating the subacute units would be minimal and the equipment needed was relatively inexpensive. Subacute care generates higher profit margins and the patient's stay was usually shorter. Medicare, Medicaid, and health insurance programs are approving this type of expense over lengthy hospital expenses. In order to provide quality care, they must attract a higher quality of nursing staff.
They reviewed the salary and fringe benefits packages and decided on an attractive salary plan for each level of employee. An additional bonus plan was implemented on reaching the goals set by the administrator. Aggressive competition is another factor LHSI has to address. Smaller local nursing care homes are having problems with escalating costs. Larger more established nursing homes are buying out small nursing homes.
If LHSI plans to survive, they must continually update the care they provide and have the financial resources to continue to exist. Health care reform is another important issue. LHSI has to appointment an administrator to continually monitor the state and federal laws that impacts their facilities. The homes are required to establish a care plan and conduct assessments for each resident. The homes must be certified annually. Medicare and Medicaid programs are strictly regulated to how many certified nurses to each bed.
They also are paid on a cost basis. These regulations are extremely important to keep updated with and guidelines followed, if not they can close the nursing homes. The administrator would be also responsible for monitoring any new health reform issues. Mrs. Hamilton also decided to look at new opportunities for growth. Their pharmacy in Michigan has shown profitable, but she was concerned about the impact of medical reform on the pricing of prescription drugs and medical supplies. They had to purchase drugs and supplies for the seven homes, so they decided to open one pharmacy which was centrally located for the seven nursing homes in Ohio.
There would be enough demand with seven nursing home units to justify the new venture. The new marketing executive prepared a plan to not only service the seven nursing homes, but the area residents could fill their prescriptions at LHSI's pharmacy also. He was also planning to include a small area were people could purchase cards, magazines, candy, and small gifts. Mrs. Hamilton was also weighing the information she had received regarding long-term care and the increasing number of elderly needing nursing home care.
The numbers needing care have increased significantly from 25 million in 1980 to 40 million by the year 2010. Alzheimer's has been a major contributor to this increase. The US Health Department has indicated that there would be an increase of 50 percent by the year 2000. There are currently 4 million people who suffer from Alzheimer's in various stages. They decided to dedicate one section of each nursing home to Alzheimer's patient care. Each unit would be self contained and secure to protect the residents from wandering off and away from other patients.
Alzheimer's patients normally require less costly care than nursing home patients because their health is still good. The key to providing this service is to provide quality for the patients and their families. Family members are often reluctant to place a family member with Alzheimer's in a home. They have tried to take care of the individual themselves and feel guilty inquiring about the facility. In order to attract new clients, LHSI must reflect a friendly and warm atmosphere. Mrs. Hamilton has made significant strides in planning their new mission.
She knows that LHSI has to provide a quality service while providing customer satisfaction. By implementing the changes outlined above, she is working cautiously towards being a more integrated health care provider.