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Changing to new Shift Patterns |
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Acquistion and Expansion of A Nursing Home
Synopsis
A Housing Association arranged to purchase a Nursing Home registered for 30 patients and increase the number to 55 patients. They already had a Home in the area and this would serve as a model for the acquistion. They had difficulty creating the staff roster and determining how many staff they needed in addition to the current compliment. My analysis of their requirements showed how many staff they would need for the current registration and the increase in staffing to the new registration of 55 patients. In addition the analysis showed that the staffing levels in the Home to be acquired were incorrect and how this would affect the profit figures as stated in the prospectus, and hence the purchase price.
Statement of Problem..
The Housing Association(HA) already had a Home and planned to expand their facilities by the purchase of another Home. They choose a Home registered for 30 patients. The aim of the HA was to introduce their current (better) employment terms and conditions and higher pay levels into the acquired Home. Upon acquiring the home, the HA planned to increase the number of patients to 55.
No one at the HA had set up a new staff roster, their current home had a staff roster that had evolved over time. I was asked to look at the staff roster in the Home the HA wanted to acquire and set up a series of staff rosters at the different registration levels with the HA current terms and conditions. In total, this involved setting up more than a dozen staff rosters.
Evaluation
In order to start planning a staff roster, the initial starting point is always the same. What is the workload? In the case of Nursing Homes, the local Health Authority determines staffing levels based upon categories of patients. In this instance, the patients are elderly and the typical staffing level is 1:5, one staff to 5 patients, during daytime. Different staffing levels are required at night, and also additional staff are required for the back up services, cleaning, catering, administration, maintenance and management. The care staff levels are based on average dependability of the patients and are the responsibility of the registered owner of the Home. I assumed that the patients would be 'average'as an initial start point.
. These staff rosters included; the current roster in the acquired Home with current pay levels and the new pay levels; the ideal staffing roster conforming to Health Authority staffing requirements at the different pay levels; the new terms and conditions the HA wanted to introduce at the different pay levels; and the expanded Nursing Home staff roster with the new terms and conditions and the new pay levels, and Health Authority staffing levels. The order of creation of the staff rosters is determined so that obvious differences are high lighted quickly
Immediately obvious was 2 glaring facts; the first, was the significant understaffing shown in the current staff roster at the Home, and the second was that the expanded Home would operate at a loss. Whilst the HA is not profit orientated, it cannot afford to operate at a loss.
Forensic Analysis
The current Home's staff roster showed that the number of trained nurses was much lower than they should be, and that whole categories of staff did not exist on the staff roster at all. This raised a number of questions about the actual running costs of the Home, compared with the figures in the accounts. Therefore, I recreated the staff roster should have had and costed the two versions in order to work out the payroll figures. The purchase price of any business is partly based on the profitability, and by reducing the headline profit, it is possible to renegotiate the price paid.
What-If Analysis
From the initial work, it was apparent that if the Home operated at the terms and conditions, and pay levels currently paid by the HA, the Home would run at a loss. Since the fee levels charged to patients is fixed by Local Council Authorities at a very low level, then increasing the fees could not be a possible solution. The alternative was to look at ways of reducing the operating costs. One parameter was pay levels, these were currently above the 'market rate'. Another parameter were the shifts themselves. They had start, finish, elapse and break time variables which combined to give higher costs than average. Other parameters involved holiday entitlements, enhanced payments for unsocial hours, pension rights, travel allowances. By seperating out each variable and doing a 'what if' analysis, it is fairly easy to arrive at a set of employee terms and conditions and pay levels, which are at, or better, than the market rate, and enable the Home to operate profitably. The largest unproductive cost concerned shift overlaps, which originally consisted of about 10% of the labour cost. Whilst various uses were envisaged to use up this time, such as training sessions, the uses actually incurred costs in themselves. The enhanced payments as originally envisaged were also very expensive. By paying extra at weekends, Bank Holidays and nights, the enhanced pay rates covered well over 50% of the working week. Each and every factor can be examined in turn and analysed. From this analysis, it is easy to predict the cost implications of each decision. It is then an easy task to decide which terms and conditions to apply.