Dr. Tauseefullah Akhund M.B.B.S, MPH (Sydney), (Australia)
COST PROJECTION
(A): Fixed Cost
| FIXED COSTS | PER YEAR |
| Start Up Cost $105,000 per-bed x 18 = $1,890,000
(20 years life expectancy)
Building 9 Bedrooms @ 2 bed 3 Shower rooms (en-suite) 3 Toilets Kitchen Lounge Laundry TV/Tape Computer Kitchen utensil Air conditioning & Heating system Laundry machine Sterilization Accessibility Wheelchair Shower chair Furniture Bed Nurse call system Telephone Hot water system Fire Extinguisher Electrical Fitting
|
$ 94,500.00
|
| Director of Nursing | $ 55,000.00 |
| Insurance | $ 1,890.00 |
| Trades | $ 27,500.00 |
| Cleaner | $ 20,000.00 |
| Clerical | $ 33,000.00 |
| RMR | $ 3,500.00 |
| Miscellaneous | $ 1,500.00 |
| Sub total | $142,390.00 |
| Total | $236,890.00 |
(B): Variable Costs
| VARIABLE COSTS | PER HOUR | PER WEEK | PER YEAR |
| Personal Salaries & Wages
Permanent Assistant Nurse
|
|||
| 2 Full time @ 8 hour morning weekday | $11.86 | $948.80 | $49,337.60 |
| 2 Part time @ 8 hour morning weekend | $16.13 | $516.15 | $26,839.65 |
| 1 Part time @ 4 hour morning weekday | $12.50 | $250.00 | $13,000.00 |
| 1 Part time @ 4 hour morning weekend | $17.00 | $136.00 | $7,072.00 |
| 2 Part time @ 4 hour evening weekday | $13.65 | $546.00 | $28,392.00 |
| 2 Part time @ 4 hour evening weekend | $18.56 | $297.02 | $15,445.25 |
|
Permanent Registered Nurse weekday
1 Full time @ 8 hour morning weekday
|
$20.75 |
$830.00 |
$43,160.00 |
| 1 Full time @ 8 hour evening weekday | $21.65 | $866.00 | $45,032.00 |
| 1 Full time @ 8 hour night weekday | $23.45 | $938.00 | $48,776.00 |
| 1 Part time @ 8 hour morning weekend | $28.22 | $451.52 | $23,479.04 |
| 1 Part time @ 8 hour evening weekend | $29.44 | $471.10 | $24,497.41 |
| 1 Part time @ 8 hour night weekend | $31.89 | $510.27 | $26,534.14 |
|
Permanent Chef (qualified) 1 Full time weekday
|
$12.24 |
$489.60 |
$25,459.20 |
| 1 Part time weekend | $16.65 | $266.34 | $13,849.80 |
| Subtotal | $390,874.10 | ||
| Fringe & Benefit | $27,361.19 | ||
| Expenses Telephone, Electricity, Gas & Water | $3,650.00 | ||
| Linen | $3,420.00 | ||
| Meal | $137,970.00 | ||
| Total | $563,275.29 |
OPPORTUNITIES FOR EARNED INCOME
The proposed Nursing Home’s life expectancy target is 20-years and the Nursing Home break-even is in five years, therefore the coming next five years are the opportunities for earned income. The estimates income for five years is: 15 years x 365 days x $92.94 x 18 residents = $9,159,237. If the Nursing Home can stand longer then the opportunities for earned income will increase as well, so we can say this is the best opportunity to earn income as well as to help the aged peoples. We can increase the income of Nursing Home by applying these three strategies in future,
• By increasing the fee for the services provided,
• By increasing the volume of services provided, or
• By decreasing either or both of the fixed or variable costs of providing the services.
BREAK-EVEN ANALYSIS
Variable cost per resident-day = $563,275.29 / 365 days / 18 residents = $85.73.
Charge per resident-day = $92.94.
Contribution margin per resident-day = revenue – variable costs
= $92.94 – $85.73 = $7.21.
Fixed costs p.a. = $236,890
Break-even units (resident-day) = Fixed costs
Selling price per unit – Variable cost per unit
(Charge per resident-day) – (Variable cost per resident-day)
= 236,890 / 92.94 – 85.73
= 32,856 resident-days (approximately five years for 18 residents per day)
Break-even value = Fixed costs
________________________________________________
Variable costs per unit (per resident-day)
________________________________________________
1- Selling price per unit (charge per resident-day)
= 236,890 / [1— (85.73 / 92.94)]
= $3,053,613.95.
BREAK-EVEN GRAPH
Break Even Graph Table
| Resident-day | 0 | 8200 | 16400 | 24600 | 32800 | 41000 | 49200 | 57400 |
| Fixed Costs | 236890 | 236890 | 236890 | 236890 | 236890 | 236890 | 236890 | 236890 |
| Total Costs | 236890 | 939876 | 1642862 | 2345848 | 3048834 | 3751820 | 4454806 | 5157792 |
| Total Revenue | 0 | 762108 | 1524216 | 2286324 | 3048432 | 3810540 | 4572648 | 5334756 |
CONCLUSION
The conclusion is very clear that New South Wales need more Nursing Homes, so this is the best opportunity to earn income by building Nursing Home, a care place to help and takes good care of older people. To achieve a goal it is important to manage the daily activities of Nursing Home by evaluation, monitoring and take corrections. The proposed Nursing Home promises the investors to earn big return from their investments with helping the community by providing Nursing Home to take care of older peoples.
REFERENCES
• Courtney, M. (1997), Financial Management in Health Services, Sydney: MacLennan and Petty.
• Life expectancy continues to increase – ABS, Australian Bureau of Statistics (2001),
http://www.abs.gov.au/ausstats/abs@.nsf/dddcf05472f88677ca2568b5007b8615/543c8451189fa8ebca2568a90013636b!OpenDocument
• Residential aged care in Australia 1999–00 a statistical overview, Australian Institute of Health and Welfare (2001), Canberra.
• Cost of Nursing Home and Hostel Care Services, Coopers and Scott (1985), Canberra: Department of Community Services.
• Report On The Construction Costs Of Residential Aged Care Facilities Prepared For Uniting Care Aging & Disability Service NSW, Hanna Newman Associates Pty. Ltd. (2001), New South Wales, Australia.
• Aged Care Act 1997, http://scaleplus.law.gov.au/html/pasteact/2/3051/pdf/AgedCare97.pdfz
• Population by age and sex, Australian States and Territories, Cat. No 3201.0. Canberra, Australian Bureau of Statistics (2000).
• Classification Principles 1997, Minister for Family Services, Principles under subsection 96-1 (1) of the Aged Care Act 1997.
http://frli.law.gov.au/s97.vts?action=View&VdkVgwKey=1998B00255&Collection=FRLI&ViewTemplate=frliview.hts
• Raising the Standard: Resident Centered Nursing Home Regulation in Australia, Housing and community Services Aged and Community Care Division (1993), Department of Health, Canberra, Australia.
• The Reliability and Validity of Nursing Home Standards, Housing and community
Services Aged and Community Care Division (1993), Department of Health, Canberra, Australia.
• Sadler. P, (2001) Thousands Wait Months For Nursing Homes, Sydney Morning Herald,
http://www.smh.com.au/news/specials/natl/ballot01/0109/14/ne ws 1.html
• Home and Community Care Program Unit Costs, Housing and community Services Aged and Community Care Division (1993), Department of Health, Canberra, Australia.