Residential Care Home in Cyprus - Example

A BUSINESS PLAN FOR DESTINY RESIDENTIAL CARE SERVICE FOR ELDERLY PEOPLE TO BE LOCATED IN CYPRUS PREPARED BY NAME: Executive Summary Cyprus is one of the countries in Europe with a high percentage of elderly persons above 65 years. Research carried out on the available care services indicated that 79% of the clients were satisfied with residential care nursing personnel and suggested an increase in the number of home care nurses, 39% recommended the provision of additional help while 12% suggested that further information about the program is needed. This information interview highlights the need to promote collaboration between formal services such as pharmacists, physiotherapists, and informal services. Residential care services provided in Cyprus need to improve their service delivery, Gaskin et al., ( 2011), to ensure that clients get good mental health, skills to adapt to changes in life and good physical health and functions. This formed the basis of developing residential care facility that will be able to provide the above needs. Introduction With the rate of increase in the elderly persons, there is a clear indication of growth in demand for care services. The high population of the elderly has had an enormous impact on government expenditure. This is regarding retirement pension schemes, health services provision and financial support that are given to the aged. This has made the government reduce its participation in supplying nursing services to the aged. However, Carrera et al., (2013) indicates that it is still committed to funding those who get care in privately run homes and residential care services as opposed to those in their personal residences. This is a clear signal that a care service for the aged is a growing sector. It makes it a lucrative business for one to venture in. Expectations of good profit margins are high in this business. These are built from the severe pressure from the growing opportunities for investment in the new capacity. There are two categories of companies providing these services in this industry in Cyprus. The first category is of ex-professionals who have been working as either nurses or social workers who venture their own business. The second group is those who are looking at home care services and residential care services as a profitable business. This gives one an opportunity to venture into the residential care nursing industry without necessarily being professional in health and social works. The price of establishing a residential care service in Cyprus ranges from approximately £400k to £2m. Understanding of the particular needs and problems of the aged is also very crucial. This helps in coming out with a tailor-made residential place for them rather than just coming up with a resident .Offering them proper food and right drugs should be accompanied by light exercise programs, social events day trips, and library services. Social activities to keep them busy are also important. Provision of service providers such as hairdressers, doctors and dentists are necessary (Walker et al., 2013). One major problem in establishing a new resident in Cyprus is marketing. Direct marketing strategies are forbidden. The only available channel for marketing is via word of mouth or through an advertisement in health professionals. Word of mouth is done by speaking to families and friends of the aged, nurses, GPs, other health professionals and social workers. These groups of people can be invited to open day forums to view the facility and the standards of care offered. Provision of a trial period is essential to clients; this allows them to sample out if it's suitable for them. Apart from the staff, the physical home structures and services offered, the location of the facility is also very vital. The aged population is popular with areas located in quite environments, picturesque, close to seas and close to parks. Overview of the Business Name, Location and management The proposed name of the business is Destiny Residential Care Service. It will be started owned and operated as a private entity .It will be owned by Jane James, who has been working as a registered nurse and has developed a passion to provide health care for the aged and disabled. DSRC will be located in Larnaca town in Cyprus. The entity will be established based on the regulations and standards set by the Care Standards Act and Health regulations set by the Ministry of health. The act describes the minimum standards of facilities, nursing; general environment and entertainment to ensure both emotional and physical needs of residents are met. It will be registered by the social welfare service (SWS) which regulates and enforces laws governing residential care services. DSRC services will be provided by professionals employed by health and social works departments’. These will include, a registered nurse with skills and experience, nursing care attendants, activities director, maintenance personnel and cooks. Its administrative services will be done separately by professionals in the administrative field. Bank loans will be included in financing the establishment of the entity. Nature of the Business The DRCS facility is an essential community facility. It will provide home care to the old residents of Cyprus. Apart from offering proper food and right drugs to the clients, it will provide light exercise programs, social events day trips, and library services. Social activities to keep the residents busy will also be available. Provision of service providers such as hairdressers, doctors and dentists will also be availed as required. Each will live in their room and have some or all of their meals served their as they may request. The DRCS will provide adequate services as per the requirements of the community. It will be operated, staffed, and licensed to provide health care services to the elderly residents. This is essential as it will provide an opportunity for the clients to lead a better life in their last stage of life. The proposed building for residential care services will have 25 single‐ occupancy units along with supporting common areas to meet the needs of the clients. The common areas would be spacious enough to allow carrying out of social events occasionally. The proposed facility will be approximately 15,791 square feet in size. DSRC desires to create a suitable environment for their clients. It intends to become the long‐term care service provider of choice for many of elderly residents in Cyprus. This Business Plan provides exceptional care at an affordable price, implementing industry and best practices to enhance the quality of life for residents (Broad et al., 2013). Business controls Employees Given the strong market demand identified in the market analysis, there is a need for recruiting employees on a lease program for some time. The lease up is anticipated to take two years as the facility picks up its operation. The business plan assumes that within two years of operation, the business will be able to sustain adequately and efficiently itself. The facility will be required to operate at full staffing level. This will include 15- full-time employees. It will also have to adhere to the operational standards and regulations set by the health department and social welfare department in Cyprus as Rechel et al., (2013) posits. Operations Facility Qualified staff through knowledge and experience will be employed.it will target the employees who have experience in nursing care and social work. A panel of 5 people will be put in place to contact the recruitment. The panel will consist of experts in the nursing field and social works to ensure staff with required skills are recruited. The staff should be able to manage the facility in the best interests of the residents. The health regulatory board should register professionals in health services. Social works, on the other hand, must acquire a certificate from the social services welfare department (Chevreul et al., 2010). The facility will work with health professionals, social works, and facility administration appropriately. A member of the nursing staff will always be available in the facility 24 hours. There will also be personnel on duty daily to maintain order, safety, cleanliness of the premise, preparation and serving of meals, ensure assistance in personal needs, keep an adequate supply of clean linen and conducting of recreational activities. A social worker employee will be required to assist the residents in planning their needs. Activities director will be expected to plan for fun activities, social events and light exercise programs for all residents. The DRCS will also recruit housekeepers, cooks and maintenance workers to ensure that meals and daily required support are provided efficiently (Kouta & Kaite, 2013). Service DRCS will focus on developing and providing health care at the 25‐unit facility. At its minimum, and in compliance with standard care act established in the national care standards commission, services which will be provided include: DRCS will ensure twenty‐four (24) hours a day access to medical personnel is provided. A registered nurse and other medically trained staff will be available 24 hours a day .This will ensure that all emergency cases are handled promptly. The registered nurse and other health professionals will also supervise daily activities and provide medication management. This will involve administering of the right drugs at the right time. Nursing staff will make frequent visitations to residents' rooms to be aware of their general whereabouts as Saraceno (2010) indicates. The health service personnel will be employed proportionally to the occupancy level of the home. Staff will include: nurse‐administrator, health and wellness director, certified nurse assistants, an activity director, personal care attendants, a food service manager, cooks, and maintenance personnel. Support and help needed by the aged to enable them to perform daily living activities such as dressing, feeding, bathing, taking medication and mobility will be a necessity (Cangiano et al., 2009). DRCS will incorporate a light exercise program and health therapies. It will ensure the provision of physical therapy as needed. DRCS will have full-size kitchens that will ensure the provision of at least three meals a day. The three meals will be served in a central dining area to allow social interactions over meals. It will also have kitchenettes in rooms equipped with small size refrigerators, oven and microwave. Provision of pleasant day event trips will also be vital. The DRCS will provide transport facilities to attend social events during Cyprus social events functions. It will also organize its social events such as trips to parks and other recreational places in Cyprus. DRSC will ensure compliance with regulations and standards of Care Standard Act, Legido-Quigley, (2008), and other applicable local, federal and state laws. It will abide by rules set by both the ministry of health and the social welfare service a department in the ministry of labor and social services. The residential facility will also provide library services equipped with reading materials .This will include magazines, journals, health books, novels, newspapers, and documentaries. This will help the elderly with a passion for reading to exercise their hobby even in their old age. This will also keep them occupied and prevent temporary loneliness (Koutsampelas, 2011). Service such as special doctors, hairdressers, dentist and barbers will be made available occasionally. They will be contracted as demanded by the residents. Marketing Market Analysis Market research and analysis was carried out to prepare a long-term care market analysis. The findings from the study indicated that there is sufficient demand for the care services. The population of the aged in Cyprus is high and is expected to grow over time. Most of them end up in residential care facilities because they cannot sustain themselves. The government has also withdrawn its financial support to the aged who are taken care in their homes. This support has been directed to paying part of the fee for those in residential care facilities. These are the primary reason most of them opt for the residential care (Akal, 2012). Most businesses in care industry prefer to offer home care nursing as opposed to residential care. This is due to the high standards set by the care act in running residential cares services. The standards have led to increase in cost of starting a residential care. This is because one is not able to use existing buildings to operate a residential care.it requires construction of new building that will be tailor made to meet the needs of the residents. This creates an opportunity for DSRC to venture into the residential care services with few competitors in the market and high demand. Market Size and Growth According to the demographic report for the years 2014 and 2015, issued by ENEPRI, the expectation of life in Cyprus is approximately 83 years and 80 years for female and male respectively. The proportion of old-aged persons 65 and over increased to 13.8% in 2015 as outlined by Amitsis & Phellas, (2013). Women comprise the highest number of individuals in care homes .This is because they tend to live a long life. The report also indicates that women at the same time are faced with more health problems thus need greatest social and nursing care. Analysis of Competition There is severe pressure on the growing opportunities for investment in the residential care service industry. Critical factors why it is a lucrative venture are; the growing demographic of the old aged group of people, the governments shift in supporting the old in the privately owned home and resident care from the assistance to those taken care in their homes. There are two categories of businesses providing these services in Cyprus. The first category is of ex-professionals who have been working as either nurses or social workers who venture their own business. The second group is those who are looking at home care services as a profitable business (McKeever, 2014). Market Strategies Advertisement is one of the strategies that DRCS will embrace in its marketing strategies. The advertisement will be put in health professionals via the yellow page .this serves as a popular channel as the professionals are popular in Cyprus, Akal, and (2012) .This will help in reaching out to potential people who need the residential care and their families. Word of mouth is done by speaking to families and friends of the aged, nurses, GPs other health professionals and social workers. These groups of people can be invited to open day forums to view the facility and the standards of care offered. This category is also subject to a trial period as well; this allows them to sample out if it's suitable for them (Georgiades, 2008).DSRC will hold an open forum in the place of targeted old people. This forum will create an environment where they can interact with the old, their families and friends. It will be an excellent opportunity to display the kind of facilities they have and the services offered. Visiting social welfare services department will also be very vital. This will help obtain data on the population of the aged and their physical addresses. It will, therefore, help in visiting the old in their respective homes and convincing them why they should opt for the DRCS. Sales Approach Development of a detailed marketing strategy, as outlined above, will need to be completed by professional consultants in marketing. It will also be important to employee sales team staffs that are familiar with the community in Cyprus. Regardless of who develops the sales strategy, it will be internalized to the DRCS organization itself. Marketing efforts will focus on; inquiring about privacy and quality of services needed by the old, nursing facilities preferred by the age, an environment that attracts the old and social activities that will help them. Every employee of DRCS will be trained to articulate the strengths of the organization in specific areas. The sales effort will also involve coordinated pre‐screening of potential residents, (Boerma et al., 2013) for income and ability to pay for the services offered at DRCS. This will be important in enhancing the financial viability of the business. The DRCS leadership must prioritize their sales and marketing efforts, especially during the start‐up years. They will also continue to engage the local community to maintain and grow its support. Personal relationships are the key to successful sales efforts. Pricing Policy The median rate for DRCS prices will be £ 1,500 per month. This is by the most extensive independent study carried out on residential care services in Cyprus. The survey estimates that Cyprus median monthly rate for 2015 is £ 1000. Data obtained from the Social Welfare Services, DipNEd, (2015), indicate that most residential care service charges range from approximately £ 2000 and £ 1500 per month. This depends on the care services provided Forecast and Financial Data Pre‐Development Efforts To develop this resident, much work has to be done. After locating the appropriate site, land needs to be identified and acquired. The land will then be made ready for the construction process. The Initial architectural design has already been done, and preliminary cost estimates required established. The owner of the business will raise £540,000. A grant of £1 million will be applied from the Cyprus Social Welfare Service department. The remaining funds will be solicited from family and friends, and the rest obtained from a loan in a commercial bank DRCS Development Budget The estimated cost to construct the DRCS facility is £2 million. Other pre-opening costs and development costs total to approximately £2.9 million. This plan proposes that the owner will seek a £1 million grant from the Department of Social Welfare Service (SWS) to fund the project; £540,000 will be obtained from personal savings .Some funds will be solicited from family, friends and donations. The remaining amount will be funded by getting a loan from a commercial bank. The total cost of successfully developing CRCS amounts to approximately £2.9 million. This is detailed below; however, it does not include construction costs. DESTINY RESIDENTIAL CARE SERVICE –DEVELOPMENT COST. EXPENSE CATEGORY ESTIMATED AMOUNT Land Costs Purchase £ 87,000 Utilities site work and Landscaping £ 23,000 Land Survey £ 3,500 Soil tests £ 2,500 Environmental survey £ 4,000 Subtotal ‐ Land Costs £ 120,000 Professional Fees Planning/Consultants £ 39,500 paid Accounting £4,500 Legal £ 3,500 Subtotal ‐ Professional Fees £47,500 Construction Costs Facility construction £1,667,691 Engineering/Design Fees £169,569 Architects and Construction Contingency £116,000 10% of hard construction costs Inflation factor £117,530 5% per year Permits/Tap fees £ 8,000 Private Utility deposits £1,500 Subtotal ‐ Construction Costs £2,072,290 Amount needed for Construction to proceed £ 2,239,790 Financing Cost Construction loan: Origination fee £16,150 1% Interest £10,350 6.5% APR "As built" appraisal £6,400 Lender inspections £1,200 Permanent loan: Origination fee £10,360 1% Appraisal update £1,000 Title Insurance ‐ Lender's Policy £1,500 Recording fees £150 Estimate Operating Reserve needed at start‐up £550,000 Sub-total £597,110 Furniture, Fixtures & Equipment Kitchen Residential ranges & fridges/Washers & Dryers £55,000 Computers, LAN and other technology £4,500 Security/Fire/Communication systems £3,600 Subtotal ‐ Furniture, Fixtures & Equipment £63 100 Total development cost £2,900,000 Source of Funds Destiny Residential Care Center Funding Category Estimated Amount Notes Cyprus Social Welfare service grant £ 1,000,000 No application submitted Family and friends donations £150,000 Cash expended to date £ 89,700 Cash that must be raised £ 450,300 TOTAL FUNDS £ 1,690,000 NET PERMANENT LOAN £1,210,000 The operating budgets and financial projections for the DRCS anticipate the payment of Net Permanent Loan of £1,210,000 at interest at 6.0% annual percentage rate. This amortized over a 30‐year period. The permanent loan amount is slightly higher than the construction loan amount because it includes financing and other transactional costs for the building loan. Monthly payments on such a loan are estimated to be £ 11,384 each month. Wages To attract experienced workers, DRCS will offer competitive wages, Lambrou et al., (2010) for the new employees. It will comply with the labor laws in Cyprus establishing the required guidelines in employment contracts will be substantial. The research was conducted to find out the competitive wage levels in the market. From the findings, the wage rate for DRCS employees will range as estimated in the table below. Occupation Hourly Wage Administrative Medical and Health Services Managers £ 15 Office & Administrative Support £ 10 Dietary Cooks, Institution and Cafeteria £ 7.31 Housekeeping Maids & Housekeeping Cleaners £ 5.15 Maintenance & Repair Workers £ 11.57 Skilled Nursing (RN) Registered Nurses £ 14.65 Nursing Aids (CNA) Nursing Aides, Orderlies, and Attendants £8 Other Medical and Public Health Social Workers £ 12 Other Operating Expenses Non‐labor expenses and operating expense can also be estimated based on the size of the DRCS, number of staff and residents. Other commonly incurred costs to operate similar facilities will also be important. The social welfare service provides detailed information about expenses that are typically incurred in a residential care facility. The table below illustrates the estimated operational costs. Expense Amount Food Housekeeping Insurance ‐ Liability Insurance ‐ Property Marketing/Advertising Repairs & Maintenance Taxes ‐ Property Utilities Other TOTAL £1,706 £ 2,112 £ 250 £ 130 £ 165 £ 1,010 £ 150 £ 1340 £ 1670 £ 8533 Financial Data A five years projected revenues, cash flows, and expenses have been prepared. Historical and projected inflationary impacts have been included in the analysis, Simonazzi, (2011). This is to achieve accuracy. The financial projections assume more staff will be employed from the first day of operations. With time, as the facility becomes fully operational, its expenses and incomes stabilize. Cash flow improves, and it starts building it cash reserves. By the second year of operations, the project begins generating real income even after debt service payments. All the five years' projections assume that the facility will never operate at more than 90% occupancy. However if it manages to exceed this level, it will be more financially viable. Cash Flow Projections YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Gross Revenue £ 405,000 £ 517,950 £ 566,775 £ 645,941 £ 654,530 Operating Expenses £ 431,484 £ 352,665 £ 342,106 £ 339,974 £ 337,340 Net Income (£ 26,484) £ 165,285 £ 224,669 £ 305,976 £ 317,190 Less Debt Service £ 136,608 £ 136,608 £ 136,608 £ 136,608 £ 136,608 Surplus (£ 163,092) £ 28,677 £ 88,061 £ 169,359 £ 180,582 Cumulative Cash Flow (£ 163,092) (£ 134,415) (£ 46,354) £ 123,005 £ 303,587 Projected Statement of Financial Income Cash basis Revenue/expenses Base month Base year 2017 2018 2019 2020 Rent Less10% Vacancy Factor TOTAL REVENUE EXPENSES Personnel Wages Telephone License or Permit Professional Fees Office Supplies Computer/Technology Recruiting Printing / Duplicating / Forms In-service Training / Education Employment Screening Sub- total Raw Food [£ 2 per elder / per day Supplies [£ 2 per elder ] Laundry Supplies [£ 1 per elder Care Supplies [£ 5per elder ] Medications [£ 7 per elder ] Activity Supplies [£ 4 per elder Entertainment [£ 2 per elder ] Sub-total Marketing Advertising Printing Sub-total Utilities and Maintenance Electricity Water / Sewer Gas Maintenance and Repairs Pest Control Vehicle Maintenance Sub- total Insurance Auto Insurance Professional Liability Insurance Property Insurance Property Taxes Sub-total TOTAL EXPENSES NET OPERATING INCOME Less debt service payments NET profit/loss 37,500 3,750 33,750 4,500 3,400 756 150 55 690 65 78 35 145 620 10,429 1,500 1,500 750 5,750 7,250 500 50 13,300 350 200 550 3,460 2,348 450 35 50 6,323 35 55 50 1,150 1,290 35,957 (2,207) (11,384) (13,591) 450,000 45,000 405,000 54,000 40,800 9,072 1,800 660 8280 780 936 420 1,740 7,440 125,148 18,000 18,000 9,000 69,000 87,000 6,000 600 159,600 4200 2400 6,600 41,520 28,176 5400 420 600 75,876 420 660 600 13,800 15,480 431,484 (26,484) (136,608) (163,092) 575,500 57,550 517,950 43,200 32,640 8,618 1,710 627 7,866 741 889 399 1,653 105,417 17,100 17,100 8,550 65,550 82,650 5,700 570 151,620 3,990 2280 6,270 39,444 26,767 4500 410 540 73,878 420 660 600 13,800 15,480 352,665 165,285 (136,608) 28,677 629,750 62,975 566,775 42,000 31,500 7,679 1,520 630 7,564 810 765 352 1,565 93,896 16,989 16,989 7,650 64,760 80,878 4,765 560 149,675 3,900 3,100 7,000 39,566 27,890 3,890 390 600 68,896 420 660 600 13,800 15,480 342,106 224,669 (136,608) 88,061 717,712 71,771 645,941 42,000 32,000 8,000 1,100 520 6,500 756 654 435 1,234 91,764 18,000 18,000 9,500 69,500 87,800 6,250 630 158,750 1,200 1,230 2,430 40,000 28,230 2,500 150 620 71,550 420 660 600 13,800 15,480 339,974 305,967 (136,608) 169,359 727,255 72,725 654,530 42,000 31,400 7,960 1,100 510 3,500 500 250 200 1,200 86,460 18,500 18,500 10,000 70,500 88,360 6,420 650 160,320 1,000 1,200 2,200 40,500 28,130 2,000 150 630 72,880 420 660 600 13,800 15,480 337,340 317,190 (136,608) 180,582. Conclusion DSRC facility will be a residential care service that aims at giving the residents of Larnasca the best services they demand. Its main focus is to provide affordable services to its residents. Services offered will include medical care, food, social events, entertainment, and library services. Support needed by residents to help them perform daily living activities such as bathing, feeding and mobility will also be provided. Professionals in nursing and healthy will be employed to ensure that residents get the best medical care. An activity director will be employed to plan and ensure that residents are provided with social activities that they need. Support staff and cooks will also be employed to ensure that any support needed by residents to perform their daily activities and meals are served as required. DSRC main focus is the needs of the residents. 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