(Solved Homework): Friendly Assisted Living Facility Friendly Medical Center, an urban, nonprofit, 450-bed…

Friendly Assisted Living Facility

Friendly Medical Center, an urban, nonprofit, 450-bed rehabilitation hospital, began to see a significant decline in admissions. Friendly Medical Center’s 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 Friendly Medical Center 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 the CEO, Fred Splient M.D. called for a major strategic planning effort to take place. In January 20X6, Friendly Medical Center 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 Friendly Medical Center 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.

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In March 20X6, Fred had his Business Development team prepare a rough estimate of the potential return on the 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 Friendly Medical Center’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 Friendly Medical Center. 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 20X6 meeting of the Board of Trustees. Fred Splient and his team introduced the Board to the concept of opening an assisted living facility on Friendly Medical Center’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 social interventions. 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 Friendly Medical Center 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 Friendly Medical Center 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 unit 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 20X6 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 20X7, 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 Friendly Medical Center.

A few days after the executive team meeting, Fred decided that it was time to set up the committee 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.


1. Comment on the pros and cons of the CEO, Dr. Splient, as the Project Manager.

2. Who is the funder of the project? Who is the sponsor? Who is the project owner?

3. List all the potential stakeholders in this project.

4. This initiative consists of a variety of separate efforts from a lot of different groups and individuals. What are the advantages and disadvantages of structuring it as a program consisting of a set of separate projects? Would you recommend this, under the circumstances?

Expert Answer

1. According to this case, I can say that there are various advantages as well as disadvantages of Dr. Splient, who is the manager of the project (CEO). What I can actually comment on this is that the project manager has been handling each and everything that needs to be done properly. Fred Splient is not the perfect man to be the project manager. This is because being the chief executive officer of a health center and is role was of an organizational leader and not of a project manager. Fred was also living with his aging parents and was developing many problems which may cause him too busy to handle the project of planning and the construction to develop an assisted living facility.


Project funder: Elder LJ

Project sponsor: JK Eckert

Project owner: S Sanders

3. All the stakeholders in this case are listed below:

  • Primary end users: these are older adults using the friendly assisted living facility-2
  • The secondary end user: these are persons or organization accessing the friendly assisted living facility-2 for the primary end users advantages.
  • Tertiary end-users: they are personal and institutions that in most of the time are not in contact directly with friendly assisted living facility-2, but they play the role within giving, enabling or financing them. In this group, we have an organization like public sector service etc

4. In most of the time program that is consisting of different projects, division functions well since they permit a group to the target upon one idea or work, with a leadership structure which in most of the time holds up its main strategic objective. Having its own CEO or president makes it much likely to receive resources from the intended company. In addition, it also allows it create a general culture that participates both to better knowledge as well as higher morale. While it also has its weakness such as competing divisions is likely to permit office politics rather than sound strategic thinking. There is also the possibility to bring compartmentalization which in most of the time can cause incompatibilities. What I can recommend on this is that this method is essential for large projects.

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