Nursing Home Business Plan

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Bright House

Financial Plan

Forecast

Key assumptions

A "full" elder care facility is generally 90% to 95% full. Our non-standard model allows us to forecast for full occupancy in the main building, since turnover rates for assisted living residents are expected to be quite low (1-2 per year, at most). The skilled nursing facility, on the other hand, requires a certain number of empty beds to offer the flexibility needed to accommodate shorter stays. We therefore are projecting reaching "capacity" of our eleven-bed facility at 10 full beds.

Our resident monthly prices are based on the current Medicare nursing-hours-per-resident-day rates for our kind of services. Medicare patients are billed at roughly $135/day for nursing care, not including the cost of any medication to be administered by our staff. Our private patients are billed at a slightly higher rate to account for the low Medicare reimbursement rate, but also to pay for the extra benefits they receive as part of living at Bright House. Our rates are roughly 2/3 of our nearest competitors, the difference being made up for in donations, and savings gained through staff retention and the use of highly trained, flexible, Elder Assistants.

The small size of our facility allows us a cost savings on maintenance and grounds.

One other important assumption concerns payables: We have assumed collection days of 60, which averages our private residents’ monthly up-front payment, and the typical 60-90 day reimbursement rate from Medicare.

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of funds

Start-up Expenses

One of the largest items in our Start-up budget is a computerized medical records system. Preliminary designs of this system have already been constructed by DigInfoMedTel. In addition to the obvious benefit of allowing multiple care-team members to easily exchange information as they change shifts, this system will allow our residents and staff to keep track of chronic conditions, monitor gradual but serious changes in condition which might be overlooked in day-to-day interactions, and corroborate quantifiable medical data for our Medicare patients in the skilled nursing facility.

Start-up Assets

Current (Short-term) Assets include $6,000 of start-up inventory (bedding, cleaning and disposable medical supplies) and non-expensed, smaller medical equipment that will depreciate quickly, and will need to be replaced in year four or five.

Long-term assets include our existing location, the former Wayfield Bed and Breakfast, currently assessed at $400,000 including renovations. The location was willed to us by Evelyn and Jack Bright last February, with the condition that we include a small Medicare facility as part of the overall plan. This category includes new Long-term Assets needed as follows: $200,000 for (long-term, resalable) medical equipment, and $150,000 for initial furnishings, after the renovation.

Medical Equipment:

  • 1 Fully-loaded Crash Cart
  • Standard monitoring equipment (blood pressure, sugar, etc.)
  • Call-button system

Furnishings:

For the common areas of both buildings, we will need couches, self-lifting recliners, tables, and chairs suitable to our residents’ needs. We have allocated $35,000 for furnishing the four common rooms.

Each private room will need a hospital-capable bed, linens, a dresser, and a phone, at the minimum. With the remaining funding, that leaves just over $6,000 per room. This budget will allow us to provide attractive, functional, and comfortable surroundings to our residents in their new homes. Each bedroom in the main building will have enough remaining space that residents can bring plenty of familiar furniture with them (up to two side tables and wingback/reclining chairs, and a second dressing table or its equivalent).

Sources of Funds

We will get a low interest loan for $210,000. We have collected donations and pledges of $291,000 Our founders will provide $407,000 

Statements

Projected Profit and Loss

2018 2019 2020
Gross Margin $1,965,708 $2,512,080 $2,565,648
Operating Expenses
Salaries & Wages $657,600 $877,608 $1,106,151
Employee Related Expenses $131,520 $175,522 $221,230
Marketing $65,524 $83,736 $85,521
Fund raising $21,841 $27,912 $28,507
Rent $84,000 $84,000 $84,000
Utilities $14,400 $14,400 $14,400
Insurance $18,000 $18,000 $18,000
Vehicle payment – 2 vans $26,400 $26,400 $26,400
Amortization of Other Current Assets $0 $0 $0
Interest Incurred $11,590 $9,300 $6,868
Depreciation and Amortization $62,500 $62,500 $62,500
Gain or Loss from Sale of Assets
Income Taxes $52,340 $67,962 $54,724
Total Expenses $1,364,127 $1,726,459 $1,993,375
Net Profit $819,993 $1,064,741 $857,345

Projected Balance Sheet

Starting Balances 2018 2019 2020
Cash $78,000 $968,665 $1,551,961 $2,427,216
Accounts Receivable $0 $0 $0
Inventory $6,000 $23,160 $23,760 $23,760
Other Current Assets $31,000 $31,000 $31,000 $31,000
Total Current Assets $115,000 $1,022,825 $1,606,721 $2,481,976
Long-Term Assets $750,000 $750,000 $750,000 $750,000
Accumulated Depreciation ($62,500) ($125,000) ($187,500)
Total Long-Term Assets $750,000 $687,500 $625,000 $562,500
Accounts Payable $0 $0 $0
Income Taxes Payable $20,774 $16,849 $13,390
Sales Taxes Payable $41,688 $41,688 $42,408
Short-Term Debt $37,130 $39,420 $41,851 $44,433
Prepaid Revenue
Total Current Liabilities $37,130 $101,882 $100,388 $100,231
Long-Term Debt $172,870 $133,450 $91,598 $47,166
Long-Term Liabilities $172,870 $133,450 $91,598 $47,166
Paid-In Capital $699,000 $699,000 $699,000 $699,000
Retained Earnings ($44,000) ($44,000) $275,993 $1,340,734
Earnings $819,993 $1,064,741 $857,345

Projected Cash Flow Statement

2018 2019 2020
Net Cash Flow from Operations
Net Profit $819,993 $1,064,741 $857,345
Depreciation & Amortization $62,500 $62,500 $62,500
Change in Accounts Receivable $0 $0 $0
Change in Inventory ($17,160) ($600) $0
Change in Accounts Payable $0 $0 $0
Change in Income Tax Payable $20,774 ($3,925) ($3,459)
Change in Sales Tax Payable $41,688 $0 $720
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions ($500,000)
Change in Short-Term Debt $2,290 $2,431 $2,581
Change in Long-Term Debt ($39,420) ($41,851) ($44,433)
Cash at Beginning of Period $78,000 $968,665 $1,551,961
Net Change in Cash $890,665 $583,295 $875,255
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