Case 5.2: Caring for Coho’s Seniors
MONTHLY CASH BUDGET[1]
The (fictional) City of Coho (population 48,000) is a commercial and residential hub in the central region. It has experienced steady population growth over the past 10 years and is expected to add 8,000 new residents in the next two decades.
Many of Coho’s long-time residents have retired or are near retirement age. Coho’s current Mayor, Nevena Bailey, sees this trend as a strategic opportunity. She believes many young, talented people will soon have to care for elderly family members and friends. In her view, building high-quality “aging infrastructure” will help attract new residents to Coho.
Bailey crafts a plan to create Coho Adult Day Services, Inc. (CADS). Under the adult day services (ADS) model, seniors live at home but spend most of each day at an ADS facility with relevant services like supervised recreation, educational programming, on-site nursing staff, and preventative health care. This model allows seniors to enjoy the benefits of independence but with a lesser burden on their caretakers. A few local non-profits provide these services, but not on the scale Bailey has in mind.
To get the initiative moving, Bailey persuades the city commission to subsidize CADS at an annual rate of $120,000. This yearly payment will come from the City’s General Fund. She also convinces Coho Memorial Hospital to donate a recently vacated outpatient clinic to house CADS. A construction manager who serves on the city planning commission says the facility can open immediately but will require at least $240,000 in renovations during the first three years of operations to bring the building in compliance with regulatory codes. The renovated facility could accommodate 85 attendees, in his estimation.
The city commission also asks the City of Coho Finance Department staff to gather information needed to prepare an operating budget for CADS’ first year.
Staff collects the following information about the basic legal and financial requirements for operating an adult day services center. Federal and state regulations require one licensed nurse practitioner on the premises and one licensed practical nurse (LPN) for every ten attendees. Comparable facilities also have one certified staff assistant for every 20 attendees. These assistants do custodial work, assist with group activities, and handle other day-to-day tasks. The market wage for LPNs is $35 per hour, and the wage for staff assistants is $22.50 per hour. At most facilities, the nurse practitioner also handles staffing, budgeting, and other administrative duties. A typical annual salary for this practitioner/administrator position is $86,000. Most facilities also employ a recreation coordinator at an annual salary of approximately $42,000. The recreation coordinator plans in-house activities, field trips, and other programs. These additional activities cost $25.00 per attendee per day (including food, materials, transportation, and other costs).