Happy Oaks Nursing Facility
Happy Oaks is a skilled nursing facility and its location is stellar given the business it is in. It is located in the middle of a relatively large city and historically, this 180 bed facility has been run at or above the budget. However, in the recent past, the building has been losing ground and as the administrator, I hereby present a report on why he building is losing ground and how this trend can be rectified on time.
After a careful and lengthy analysis of the Happy Oaks scenario, I am convinced that there are a number of inherent problems to blame for the facilities declining fortunes. It is clear that a speedy solution must be formulated if Happy Oaks is to maintain its relevance at the market place given the fact that amongst other things, it is sandwiched between two other health facilities, that is, a large hospital which is the only Trauma Level 1 in the locality and a health complex that houses quite a number of physicians in private practice. In this case, the bottom-line is to identify as well as address the problems at play in Happy Oaks and generate enough revenues to cover the costs and ensure that the facility makes a profit given the fact that it is a for-profit facility.
The problems at play
The first issue the facility needs to address is the raising rates given the fact that currently, the corporate offices have raised them by approximately 12%. If nothing is done in the light of this, the facility may end up losing a big chunk of its residents to other cheaper facilities. There are a wide range of solutions to this but they will be addressed in the rectification suggestions of this case study.
The second related problem that Happy Oaks faces is the raising costs in the services sector. According to Blocher (2004), businesses must be able to increase the prices of their goods and services to reflect inflation. Businesses that cannot adjust their prices upwards to reflect the increasing cost of doing business may face a hard time maintaining their relevance in the market place. With that in mind, happy oaks should be in a position to revise and/or adjust the price of its services across the board upwards over time so as to respond appropriately to inflation.
As will be seen in the rectification suggestions part, this issue can also be addressed conclusively in a number of ways. Next, the fact that the facility is sandwiched between two health facilities i.e. a large hospital and a medium sized health complex means that Happy Oaks must develop strategies to not only protect its market share and niche but also to exploit the opportunities that such a position presents. How this can be done will also be addressed in the rectifications suggestions section.
In this scenario, I would keep the whole decision making process open ended with the various departmental heads free to make suggestions and where appropriate, incorporate them into the grand plan towards the rectification of the current issues Happy Oaks. That is to say that their input will be highly encouraged.
Jamie, the marketing director does not believe the rent increase is justified. She in fact believes that the whole facility is just overpriced. I however find her argument defective on several fronts. For instance, it is clear she has not conducted a SWOT analysis. Indeed, the facility isn’t the most expensive and realistically there is no way rates can be held constant over a large time period without upward adjustments to reflect prevailing dynamics.
To begin with, it is not the rates that should be looked into but other operational costs. There is an urgent need to reduce costs i.e. operational costs by utilizing a wide range of cost cutting measures so as to enhance profitability. According to Drucker (2007), one way of cutting costs is outsourcing the non core activities of a firm. In my own opinion, Happy Oaks has no business employing staff or maintaining fully fledged departments to address non-core activities. Considering that Happy Oaks is a skilled nursing facility, activities like marketing and maintenance should be outsourced so the Happy Oaks can concentrate on its core activity, that is, skilled nursing. Another effective cost cutting measure which the facility can utilize is laying off redundant staff members.
Currently, all the directors claim they are fully staffed. A meeting should be conveyed and the various department heads asked to identify redundant units and individuals the facility can do without. It is important to note that laying of employees for purposes of enhancement of profitability has been questioned on various quarters but in my own informed opinion, this would and is indeed a welcome step as it will free up some cash for other worthy developmental activities.
Next, the facility should concentrate on value addition to its services to attract and keep clients. In all its services, the facility should ensure that there is an aspect that is not commonly offered by the other skilled nursing facilities. Kreitner (2006) argues that the concept of kaizen, that is, continuous improvement should guide an organization’s every decision in today’s global landscape.
This should also be the case with Happy Oaks and as it concentrates on value addition to all the services it offers it should ensure that the concept of continuous improvement takes root across the organization. The facility can also tap into its own niche market to avoid a direct competition with the other close players in the skilled nursing service delivery. Drucker (2007) argues that creation of a niche is a strategy that can be tapped by business entities as a response or strategy against direct competition. It should however not be lost that the facilities on either side of Happy Oaks cannot be viewed as competitors per se. This is because each has a market it serves which is relatively unique from that of Happy Oaks. Viewed from that light, Happy Oaks can act as a ‘support centre’ to both facilities once it enhances its own niche i.e. as a skilled nursing facility.
In my own opinion, rectifying the facilities current situation calls for wide consultations and involvement of all the department heads. In cases where the attainment or achievement of the desired results call for drastic changes, the involvement of all the functional heads as well as the departmental heads is critical. These individuals are the drivers of change in any organization and if they do not believe in the measures the organization is taking to address specific issues, they can in one way or the other frustrate the implementation of the same.
Blocher, E. (2004). Cost Management: A Strategic Emphasis. World Bank Publications
Drucker, P.F. (2007). Management challenges for the 21st century. Butterworth-Heinemann
Kreitner, R. (2006). Management. Cengage Learning