University of Wisconsin-Madison From the SelectedWorks of Vikas Singh

May, 2006

Gero-Sys, Plan for a New Adult Day Care Center Vikas Singh, University of Arkansas for Medical Sciences Katherine Goodnight, University of Arkansas for Medical Sciences Chris Ellis, University of Arkansas for Medical Sciences Stacy Schriver, University of Arkansas for Medical Sciences

Available at: http://works.bepress.com/vikas_singh/15/

GERO-SYS Plan for a New Adult Day Care Center

TUCSON, ARIZONA

Prepared By:

Vikas Singh Katherine Goodnight Stacy Schriver Chris Ellis

May 3, 2006 Photo from http://www.hellotucson.com/Photos_Photos.Cfm

Executive Summary The environment in Tucson, Arizona is the ideal location for Gero-Sys to put its new Adult Day Care Center. Over the last decade, large numbers of elderly people have settled in the area for retirement, causing the median age to jump by 11%. The population has a high incidence of Alzheimer’s disease, dementia, cardiovascular disease, and other conditions affecting the elderly, as well as, a high rate of disability with over 46% of the 65+ population having some form of disability. With the area growing at twice the national average, the economy in the area is very attractive to outside investors such as Gero-Sys. Currently, there are only two licensed competitors to a Gero-Sys facility. The two facilities together have a capacity of 144 clients and one facility is focused specifically on specialized population. Depending on the method, estimates of demand range from 252 to 728 clients within the city with sizable future growth expected. This represents a gap that Gero-Sys should fill. A partnership with St. Mary’s Hospital of the Carondelet Health Network offers our clients access to the full continuum of care and the most state-of-the-art technology and facilities. The Carondelet Health Network would provide opportunities for future growth in the area as demand allowed. Using conservative expense and revenue projections, the facility would breakeven with 58 clients per day. Current projections account for growth from 65 to 85 clients daily over three years, allowing the facility to meet its goal of breaking even within the first year of operation.

The addition of the new facility in Tucson would be a valuable and profitable addition to the Gero-Sys family of Adult Day Care Centers, providing quality care to clients in the community and opening new markets for Gero-Sys in Arizona.

Options for the Elderly History of Gero-Sys

Options for the Elderly Every older adult would ideally like to be able to live independently; unfortunately, many require assistance in daily living as they age and their health begins to deteriorate. Luckily, there are many living and day options for individuals 65 and over. There is a large continuum of care for the elderly. The least restrictive would be independent living with no assistance and the other end of the spectrum would be a nursing home. Between these extremes are retirement living communities, living with family, living at home with a personal aid, adult day care centers, and multiple levels of assisted living. Retirement living communities are excellent options for older individuals that need occasional help or assurance that help is available. Retirement living communities offer a wide range of services. Some places have no assistance on site, but instead have measures inside the housing unit that make it easier to get help such as a button that connects directly to 911. Other facilities have medical professionals that are available to provide assistance. Living in these facilities presumes that individuals can perform the activities of daily living. For those with a need for limited assistance, retirement communities are a great way to maintain independence while still having access to help. For the elderly that need a little more help, many move back home with family. The family then assesses the level of care needed for their loved ones. Many families may help with the elders’ activities of daily living such as dressing and eating. If the family needs assistance during the day, they may hire a personal aid or take them to an adult day care. Services offered by adult day care vary widely, from being purely for

entertainment to more like a hospital. The family is able to choose a facility depending upon the level of care needed. An elder with Alzheimer’s disease might look for a center that has services to meet those needs. Adult Day Care has the possibility of meeting health care needs as well as social needs. This is a wonderful way to help individuals care for their loved ones during the day. Some elderly might need residential help beyond a day center or community living. Assisted Living Facilities have many levels to meet the needs of the elderly with more help. Finally, nursing homes may become necessary as the needs of the elderly increase extensively. Nursing homes will help with all activities of daily living including but not limited to feeding, dressing, and moving. This is usually a last resort for the elderly as it is the most restrictive level of care.

History of Gero-Sys Gero-Sys is a nation wide company that services the over 55 population by operating Adult Day Care Centers. The Centers offer supportive, social and health services. Gero-Sys began as a family owned business in 1972 in Little Rock, Arkansas. The business began with a daily population of 15 people and has since grown in Little Rock and currently has a daily census of over 50 people. The company is currently expanding into cities with a population of 500,000 or more. Now there are 35 locations around the United States. Gero-Sys Day Care Centers offer access to a large continuum of services for those over 55. Family members and caregivers are able to drop their loved ones off at a local center before work and return to pick them up afterwards. While at the center the adults participate in a wide range of activities. The highly trained staff constantly monitors the clients and is able to recognize early symptoms of a number of chronic diseases such as Alzheimer’s disease or respiratory ailments. They are also able to recognize the early signs of physical and cognitive impairment, social isolation and the need for personal services. The staff is able to refer the clients to the medical care they need that cannot be provided by the Center. While the Centers do provide entertainment for the adults, their health is also improved by early detection of diseases. Gero-Sys contracts with a hospital in the area the Center is located for certain services for the patients. These services include but are not limited to dietary, x-ray, and lab. This allows for a greater level of care and access to a full continuum of care.

If an adult needs more intense services, they can use Gero-Sys’ next level of care, the highly structured Day Hospital. This Day Hospital is operated by the geriatrician and is in some locations split into gero-psych and physical services. If the adult needs a higher level care, inpatient services will be referred. Adults can be moved up and down the continuum offered as needed. The company is able to bill private pay, insurance if applicable, Medicare, Medicaid and the State.

Environmental Analysis An assessment of the environment is an integral part of any plan. It entails gathering information pertaining to the demographics, the economy, the socio-cultural profile, attitudes and perceptions, utilization rates, disease and disability statistics, the levels of in-migration and out-migration and current and future demand forecasting in the Tucson area.

Legislation and Reimbursement Trends Currently there are no Certificate of Need requirements for long term care facilities in Arizona. However the facilities should meet a number of usual requirements for Licensure, Medicare and Medicaid certification, patient safety and abuse and OHSA, just to name a few. Arizona requires adult day health care facilities to be licensed. The definition of this type of facility is a center that has more than five adults not related to the owner that provides adult day health services on a regular basis during a portion of a continuous 24 hours. New facilities must apply for a license through the Arizona Department of Health. This license must be renewed after a year. A renewal license has a potential of lasting either one or two years depending upon how well the facility adheres to the guidelines and the inspection. An application must be submitted between 120 days and 60 days before the license expires. The agency does require that certain services be provided to customers. These services must include: assistance with activities of daily living, health monitoring/health related services, medication administration, nursing services, as well as social services.

There is also a requirement of staff that administer these services. A registered nurse must be responsible for the health care needs of the customers. Further, administration of medication and treatments, monitoring of participants’ health status and conduction of initial physical assessments must be available daily by a licensed nurse. At least two staff members must be there at all times if there are two or more clients. Arizona also has training requirements. The first requirement is orientation for all employees. This orientation must include policies and procedures, participant’s rights and facility rules, protection of the client privacy and confidentiality, basic infection control, as well as emergency, fire and safety procedures. All staff must receive at least 10 hours of in-service training per year. Orientation can count as training hours. Further, staff members who provide direct care to clients need an additional four hours of training. This training needs to include communication skills, activities of daily living assistance, special needs of the elderly and disabled, and personal living skills training. Both long term and short term success of our proposed facility depends heavily on the reimbursement trends in Arizona. Long-term care services in Arizona are financed by a variety of arrangements like, Medicare+Choice, Medicaid and private pay. In addition there are many state programs run by the Arizona Long Term Care Services (ALTCS), which are contracted to individual providers. Government subsidized Home and Community Based Services (HCBS) are available under the Arizona Long Term Care System (ALTCS, part of the State’s Medicaid program). ALTCS provides services in a person’s home, which is a possible alternative to institutional care. One option for our

new facility would be to contract with ALTCS as a provider of choice in the area for adult day care services.

The Home and Community Based Services available through ALTCS are: •

Adult Day Care - Includes planned care supervision and activities, personal care, training, personal living skills, meals and health monitoring in a group setting for a portion of each day.

•

Attendant Care - Includes assistance with activities of daily life such as dressing, bathing, eating and mobility. This service is typically provided daily or several times a week.

•

Home Health Services - Includes nursing services, home health aide services, occupational therapy, physical therapy, respiratory therapy and speech therapy.

•

Personal Care - Includes assistance with activities of daily life such as dressing, bathing, eating and mobility, which is typically provided once a week, or every-other-week.

•

Homemaker Services - Assistance with activities such as cleaning, shopping, meal preparation and laundry.

•

Home Delivered Meals - Typically include lunch delivered to a person’s home, Monday through Friday.

•

Hospice Care - Supportive care and counseling for terminally ill members and their families and caregivers.

•

Respite Care - Short-term or intermittent care and supervision to provide rest and relief for the family member caring for a person who is elderly or disabled.

•

Transportation - Provided to and from approved health care services.

Source: http://www.azdhs.gov/

Individuals who do not meet the ALTCS financial and medical eligibility requirements may be eligible for Non-Medical Home and Community Based Services through the Arizona Department of Economic Security (DES), Aging and Adult Administration. This case managed system of care offers an array of services designed to help aging and vulnerable individuals to remain living independently in their home and community. Services, which are the same as those provided by ALTCS system under HCBS and enumerated above, are offered through contracted agencies.

So in summary, there is a wide array of payment mechanisms in place for our services including government resources, private insurance and out of pocket payment.

Home and Community Based (HCBS) Services, Long-Term Care Financing & Trends

HCBS

Source: Gibson M J et al., 2004, Across The States Profiles For Long term Care, Sixth Edition, AARP Public Policy Institute

HCBS Financing

Source: Gibson M J et al., 2004, Across The States Profiles For Long term Care, Sixth Edition, AARP Public Policy Institute Primary and Secondary Service Areas The primary service area for Gero-Sys Adult Day Care Center in the Tucson area will include several zip codes – 85709, 85713, 85743, 85745, 85746, 85701, 85705, 85719, 85714, 85708, 85706, 85716, & 85711. Since Gero-Sys ADC Center is a new entity in the region the abovementioned areas will be the primary service area for the facility.

Source: http://datawarehouse.hrsa.gov/DWOnlineMap/MainInterface.aspx , accessed in March/April 2006, Site has changed now and the output generated is different. Gero-Sys will capitalize on the lack of sufficient adult day care facilities in the region, excellent transport system for the elderly, and natural boundary created by two tributaries of the river, and area falling between these two tributaries and to west of it. There is also a line/barrier created by Interstates 10 and 19. So the secondary service area for Gero-Sys would be 85720, 85710, 85711, 85711, 95712, 85715, 85730, 85704,

85741, 85747, 85750, 85719, & 85740. These zip codes fall within a 20-mile radius of St. Mary’s Hospital and are within a 30-minute driving distance.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Population and Demographics The area of operation of our proposed facility and its market in entirety is Pima County, Arizona, specifically the Tucson MSA so our focus is on the demographic characteristics of the Tucson MSA.

Due to the increase in life expectancy and the movement of the Baby Boomers cohort to age 65+, the median age of the US population will increase, more so for Tucson MSA due to the attractiveness of our community as a retirement location.

As we can see from the graph below, that Tucson City has significant number of people age 55+, the total number being ~81,700 people age 55+ in 2000 (Planning Department, City of Tucson).

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

According to most conservative estimates, around 19% of the people in Tucson MSA have some kind of activities of daily living limitation because of physical mental and emotional problems (BRFSS). Applying this percentage to the number of people age 55+ in the area (approximately 81,700), gives a result of approximately 15,500 people. This is a very high number, more so for us as there are only two competing adult day care centers in Tucson city, located a distance from our service area. The median age of Tucson in 2005 was 32.1 years, up from 30.6 years, a decade ago representing an eleven percent increase. The number of women age 75+ increased by 37% during the same period, from approximately 13,000 to approximately 18,000. This population is expected to grow exponentially in future, as illustrated in the population projection table below.

Population Projection Population by Age and Sex Pima County Age & Sex 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95+ Total 2006 28,590 21,614 17,381 15,467 12,971 9,514 5,137 1,943 565 480,156 Male 30,897 24,783 20,352 17,810 16,329 13,477 8,057 3,980 1,696 500,821 Female 59,487 46,397 37,733 33,277 29,300 22,991 13,194 5,923 2,261 980,977 Total 2007 29,263 23,630 18,132 15,876 13,188 9,632 5,531 2,105 622 491,451 Male 31,841 26,723 21,408 18,213 16,394 13,711 8,541 4,223 1,852 512,467 Female 61,104 50,353 39,540 34,089 29,582 23,343 14,072 6,328 2,474 1,003,918 Total 2008 30,136 25,219 19,367 16,152 13,487 9,849 5,774 2,285 692 502,565 Male 32,937 28,384 22,858 18,626 16,482 13,869 8,937 4,492 2,016 523,941 Female 63,073 53,603 42,225 34,778 29,969 23,718 14,711 6,777 2,708 1,026,506 Total 2009 31,143 26,901 20,477 16,588 13,635 10,001 6,010 2,456 770 513,511 Male 34,199 30,033 24,175 19,247 16,598 13,874 9,329 4,728 2,200 535,285 Female 65,342 56,934 44,652 35,835 30,233 23,875 15,339 7,184 2,970 1,048,796 Total 2010 32,089 28,639 21,612 17,023 13,833 10,262 6,229 2,616 856 524,269 Male 35,310 31,946 25,300 20,006 16,673 13,977 9,704 4,948 2,355 546,454 Female 67,399 60,585 46,912 37,029 30,506 24,239 15,933 7,564 3,211 1,070,723 Total

Source: Arizona Department of Economic Security, Research Administration, Population Statistics Unit, 2006 Also we are strategically located to be near to the future elderly population growth areas and it was one of the major reason for our partnership with St Mary’s Hospital, as it will provide us with expertise and services and at the same time will enable us to be near the present high elderly population area and future growth areas. The situation becomes clear with the correlation of the maps of primary and secondary service areas discussed above with the chart given below about dynamic population change areas in Tucson city.

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Population Health Status Pima County has a high burden of chronic illnesses and disability (second highest in the state of Arizona). This is further compounded by the high percentage and growth of the elderly population, low percentage of healthy lifestyle in this cohort and in-migration of elderly people to this area for retirement. Behavioral Risk Factors For Aged Population Older Tucsonans engage in less healthier lifestyles then their counterparts elsewhere and also report decreased perceived or real health status. As shown in the chart below, this translates to a higher incidence of disease and disability and leads to a greater reliance on the whole continuum of elder care services.

Disease Elderly populations of this region have high incidence rates of: •

Alzheimer’s and other forms of dementia (one of the leading causes of death)

•

Cardiovascular diseases

•

Diseases of the respiratory System

•

Cancer

Pima County also has a higher average or disease burden of the above-mentioned diseases compared to the entire state, illustrated in the charts below.

Source: Arizona Department of Health Services

Disability For our facility, the most important measure is the disability (physical, mental and emotional) profile of the people residing in the Tucson area, since this will translate into demand for our services. Our research into the prevalence of disability and disability characteristics showed that most of them are consistent or fall in the range of diseases having the highest hospitalization rates. Overall, more than 46% of the people above age 65 have some form of disability. There is also an additional component characterized by limitations in ADL’s and IADL’s. The chart below illustrates the findings.

Source: Tucson Planning Department, American Community Survey, 2000

Out of approximately 117,000 people over the age of 65 in Pima County, more than 48,000 have at least one kind of disability, out of which more than 28,000 reside in the Tucson MSA. A detailed breakup of the people age 65 and over with disability according to number, type and distribution is shown below.

Source: Arizona Department of Health and Department of Economic Security. 16.7% of people age 55-64 years, 20% of people age 65-74 years and 22.5 % of people age 75+ in Arizona self-reported fair or poor overall health status, and as is commonly known, self perception of poor health translates into seeking health care services.

Economy The Tucson area is one of the fastest growing areas in southern Arizona. The area is home to over 884,000 people with a civilian population of over 406,000 people, and the average earnings per worker is $32,300 (Tucson Department of Commerce). It is fast becoming a leader in new knowledge-based economy. The Milken Institute ranked Tucson in the top 5% of all communities in high-tech manufacturing output. Tucson has more than 1200 high-tech companies like Texas Instruments, IBM, Raytheon Missile Systems, America Online, etc, employing over 50,000 people. The whole area is growing at twice the national average. Approximately 63% of the working population in Tucson is in the labor force (TDMC). Arizona has “Right to Work” laws, which have resulted in

one of the lowest rates of unionization in the US. Low workers compensation and unemployment insurance rates make it a favorable destination for both the workers and employers. Every year more than 20,000 people migrate to this area due to better opportunities provided by the growing business community, affordable cost of living and beautiful climate.

Source: Tucson Department of Planning

Changes to Critical Infrastructure Tucson lies at the confluence of major interstate and state highways in the region ( I-10, I-8, I-19, & State Highways 93, 191, 60). This would help make future expansion possible by setting up our own facility or partnering with other providers in another high growth region. Economy and infrastructure are some of the major requirements and key indicators for predicting success of a venture.

Source: www.mapquest.com St Mary’s Health System, the hospital with which we have selected for partnership is accessible on all sides through roads, two of which are major roads leading directly to state and interstate highways. It is also located very near to the international airport and is within 20 miles driving distance from high growth rate zip code areas and major businesses where the informal caregivers of our patients might be working.

Source: www.mapquest.com Other advantages to choosing this area include its close proximity and accessibility to the future growth areas and evolving areas in the city and also to the suburbs of Tucson, from where most of our clients are expected to come.

Source; Tucson Department of Planning

Households The foundation of our adult day care center is to provide day care services to disabled and our choice of Tucson and the area around St Mary’s Hospital is based on that. The people who will seek our services are family members with at least one elderly person who needs round the clock supervision to some extent. Gero-Sys will provide day care services to these individuals while the informal caregivers are away for work during the daytime, therefore household characteristics are extremely important for our business plan. In the Tucson area, 35% of households are married couple families.

Source: Tucson Department of Planning Educational attainment of the people in an area is a proxy for their financial viability and healthy attitude towards healthcare. In Tucson less than 14% of people have the low educational attainment of high school diploma or less. The majority is educated and employed in the civilian workforce.

Source: Tucson Department of Planning Much of the expected growth is in the area of our facility and is more accessible to the evolving zone and future city through excellent and less cluttered highways.

Source: http://www.pagnet.org/TPD/CIDS2003/Chapter-2-Population.pdf

Household Characteristics Number

Percent

192,891

100.00%

112,515

58.30%

55,970

29.00%

76,546

39.70%

34,519

17.90%

26,678

13.80%

16,373

8.50%

80,376

41.70%

62,287

32.30%

17,963

9.30%

Households with individuals under 18 years

62,636

32.50%

Households with individuals 65 years and over

42,170

21.90%

Average household size

2.42

(X)

Average family size

3.12

(X)

Total households Family households (families) With own children under 18 years Married couple family With own children under 18 years Female householder, no husband present With own children under 18 years Nonfamily households Householder living alone Householder 65 years and over

Source: US Census Bureau

Dependency Ratio The dependency ratio quantifies the burden of informal care to the elderly in a population and translates into utilization of elderly care services. The dependency ratio in Pima County is among the highest in United States. It was 79.3 for Arizona in 1995 and is expected to be 94.5 in 2025 (US Census Bureau).

Levels of In-Migration and Out-Migration The levels of in-migration and out-migration affect the client base for our facility making it an important part of our plan. Tucson has been having considerable inmigration of people over the last decade, which is expected to increase more, particularly for the elderly population, as it is one of the most favored retirement locations. For Tucson, domestic in-migrants were 60,896, domestic out-migrants were 10,026, making net migration 3,130 and the net migration rate is 158.2, for the last five years (US Census Bureau).

The long-term ratio of in-migration to out-migration varies from 4:3 TO 3:2. From 2000 to 2001, there was immigration of 15,133 people (50,433-35,300).

Technology and Scientific Advancements As discussed earlier, the Milken Institute ranked Tucson in the top 5% of all communities in high-tech manufacturing output. Tucson has more than 1200 high-tech companies like Texas Instruments, IBM, Raytheon Missile Systems, America Online, etc, employing over 50,000 people. Adult day care is not so sensitive to technology acquisition as other types of direct healthcare. Some of the technological advances affecting it are electronic records, electronic monitoring system, new drugs, etc. Our prospective partner, St. Mary’s Hospital, has been providing services to the population of Tucson for many years and has all the latest technology and realizes the importance of technology to the healthcare.

Manpower and Staffing Issues There are many training institutes and academic centers that produce a large number of healthcare professionals every year in the Tucson area.

Catastrophic Events By virtue of its location, Tucson faces the possibility of very few natural catastrophic events. The only areas of concern are flash floods and tornadoes. Tucson has made many preparations for dealing with these possibilities and many others are under

progress, like building up a reservoir for flash floods. Tucson has the City of Tucson Floodplain Ordinance in place to deal with that issue.

Handmaker Adult Day Care Day Break Adult Day Care

There are only two licensed adult day care centers in Tucson, Handmaker Jewish Services for the Aging and Day Break Adult Day Care. The chart below gives a list of the services offered:

Beds Initial Assessment Memory Impaired Develop Disabled Transportation Meals Scheduled Activities Scheduled Outings Exercise Medical Assistance Prescription Help In-facility therapies Personal Care Counseling/Support Education Link to hospital Asst Living/LTC Care Management

Handmaker Adult Day Care 100 X X X X X X

Day Break Adult Day Care 44

X X X X

X X X X X

X X X X

X X

X X

Handmaker Jewish Services for the Aging Handmaker opened in Tucson in 1963. Their main lines of service are assisted living apartments and studios. The level of care ranges from social facilitation to long term skilled nursing care. Services offered include housekeeping, Safety Call System, assurance checks, monthly health monitoring and transportation for shopping trips. There is also a special memory impaired community limited to 16 beds. Handmaker also offers a daily adult day care. Lunch is prepared by an on-site chef. Chair exercises, pet therapy, religious services and a music program are offered for the patients. Handmaker is a not for profit organization.

Mission of Handmaker Jewish Services for the Aging Guided by Jewish values and traditions, Handmaker takes a leadership role in providing a continuum of care and services designed to enhance the physical, spiritual, emotional, social and intellectual quality of life for the aging, without regard to race, color or creed.

Location Handmaker is located at 2221 North Rosemont Boulevard in Tucson. This is 8.45 miles away from St. Mary’s Hospital. It is located on the other side on Interstate 10, to the north east.

Map of Handmaker Jewish Services for the Aging

Distance between Handmaker and St. Mary’s Hospital

Day Break Adult Day Care The second licensed adult day care center in Tucson is Day Break Adult Care. The day care was created by the Lutheran Social Ministry of the Southwest. This organization has many other programs that help the community including 300,000 hours spent to help the homeless, jobless, disabled, lonely, isolated and depressed. The organization’s goal is to meet the needs of the all people. It became a multi-service organization in 1970. However, the day center opened only 4 years ago. The day center offers services to all elderly but specializes in those with Alzheimer’s disease, dementia and post-stroke elderly. There are currently 22 members enrolled. They aim to provide mental and physical stimulation by offering activities such as fishing, baseball, golf, bowling, spelling bees and word searches. Two days a week, Apache Junction comes for brain rehabilitation to anyone who needs it. They maintain a 5-1 staff to client ratio. Fees are $8 an hour, except for Tuesday and Thursday when the rehabilitation is offered. This facility provides services 7:30 a.m. to 5:30 p.m. Monday through Friday. The organization also provides in-home services to the elderly.

Mission of Lutheran Social Ministry of the Southwest Showing kindness, doing justice, and serving those in need

Vision of Lutheran Social Ministry of the Southwest Following the example of Christ, LSMS will provide, for all people, quality human care services that build and strengthen individuals, families, and communities.

Location Day Break Adult Day Care is located at 5360 East Pima Street in Tucson. This center is very close to Handmaker Jewish Services for the Aging. It is 8.55 miles north east of St. Mary’s Hospital and is also on the other side of Interstate 10.

Map of Day Break Adult Day Care

Distance from Day Break Adult Day Care to St. Mary’s Hospital

Mission Mission Philosophy Target Audience Segmentation Strategy SWOT Analysis Services Hospital Analysis Goals & Objectives Time Line

Mission Gero-Sys Adult Day Care Center is a dynamic provider of accessible and affordable high quality life-care for older members of the Tucson community. We constantly work to maintain and improve the functioning of our clients using superior care in illness and wellness that ensures respect for each individual and the future viability of our facility.

Mission Philosophy Gero-Sys Adult Day Care Center’s employees and medical staff are dedicated to offering accessible and affordable care for the elderly members of our community while maintaining the highest quality of care. We shall maintain service quality through the principles of effective management, courtesy, reliability, respect, and concern; while providing an environment that is responsive to clients’, guests’, and employees’ needs and rights.

Target Audience The new adult day care center will offer services primarily for adults over the age of 65, but also offers the same services to those over the age of 55. The market audience includes all adults, regardless of age. While those over the age of 55 are eligible for the services, those under the age are potential caregivers that will bring a client to the center. Further, those below 55 are potential clients of the center. It is important that they become aware of our services now, so when they are in need of the services, they will come to us.

Segmentation Strategy Marketing the services offered by our adult day care will be key to overcoming the lack of reputation and name recognition in Tucson. The first place we will focus our efforts is in St. Mary’s Hospital. The first target group will be physicians that treat the elderly in any way. We will make contact with this group of physicians and explain to them our services and how we benefit the elderly. We will supply them with our brochures to provide to their patients, as well as referral pads they can use to refer their patients to us. Then we will target those that treat adults. We will explain to them our services and how this can benefit the elderly and their caregivers. We will make sure they have ample brochures and referral pads as well. We will also display posters in hallways and elevators announcing the new services. Within a short time, employees and patients should become very aware of the new services being offered on or near their premises. Recognizing the importance of the internet, we will make sure to have a comprehensive website, giving details of all the services offered and our prices. It will also include big text and pictures so it is easier for the elderly and their caregivers to read. A link to our e-mail will also be provided. The goal of this website is clarity and ease in usage. Finally, we will advertise in the newspaper. We will take out daily ads at first. After our clientele has grown, we will reduce our ads to the Sunday editions only. The newspapers we will place ads in will include: Arizona Daily Star, Inside Tucson Business, Tucson Citizen and Tucson Weekly. These newspapers are all also available on-line, increasing impact of the ad.

SWOT Analysis A general strategic analysis was performed for Gero-Sys in the Tucson area. The strengths, weaknesses, opportunities, and threats that were identified are outlined below in table form.

Strengths • • • •

Established practices through existing centers Management experienced in industry Experience establishing centers in other unknown areas Strong financial position

Weaknesses • • •

Threats

Opportunities • • • • • •

Tucson is a strong economic area Growing older population High incidence rates of Alzheimer’s and dementia in area Over 46% of 65+ population has some form of disability. Low number of existing licensed centers Interest from potential hospital partner

Lack of experience in Arizona No name recognition in Tucson No history with providers in area

• • • •

Lack of facilities attracting other firms Possible expansion by existing centers LTC facilities or hospitals branching into this service Presence of substitute services in area

Services Healthy Arizona 2010 In planning services for a potential Adult Day Care Center in Tucson, Healthy Arizona 2010 was reviewed. Healthy Arizona 2010 was modeled after the national Healthy People 2010. Healthy Arizona 2010 was designed to improve the quality of life and work to remove disparities in health. The plan focuses on twelve areas, of which three were especially important for Gero-Sys; physical activity, nutrition and mental health. Performing physical activity on a regular basis lowers death rates. Regular physical activity has many positive effects on the health of a person, including reducing blood pressure, reducing the risk of developing diabetes, reducing risk of death from heart disease, enhancing mental health, and many others. In particular for elderly people, regular physical activity can reduce the risk of falls and help them remain independent longer. Strategies to improve the level of regular physical activity among older people include, promoting the use of community facilities and other safe places for older people to be active, promote programs that encourage those who have not been active to get moderately active, and promote peer group support. Four of the ten leading causes of death can be connected to dietary factors. Hypertension, obesity, and high blood cholesterol are some of the dietary-related risk factors for heart disease. Risk of cancer and developing diabetes can also be significantly reduced through proper nutrition. Healthy Arizona 2010 proposed several strategies for improving the nutrition of older people, including promoting the increased consumption

of fruits and vegetables, developing a public education program on nutrition, and promoting increased consumption of calcium. Mental Health is a major concern across the nation, but suicide among older people is a main concern in Arizona. Arizona ranked third in the number of suicides of those 75-79 years of age. Chronic conditions, such as Alzheimer’s disease, heart disease, and diabetes, can trigger depression. Approximately 15% of the 65+ population exhibits some depressive symptoms. Healthy Arizona proposed some strategies to improve the diagnosis and treatment of depression in the elderly, including working to increase the understanding of depression, promoting community prevention programs which concentrate on mental health needs, and increasing support for identifying and responding to depression. (Healthy Arizona 2010, ADHS)

Gero-Sys Services Taking into account all of the health concerns of the Arizona elderly population and the strategies from Healthy Arizona 2010, the new Gero-Sys facility plans to offer a variety of services and activities that benefit our clients. Some of these services and activities include: •

Adult Supervision – All aides have a low client to nurse ratio. Clients will receive supervision and interaction among themselves and their assigned aides.

•

Formal Low-Impact Exercise – All clients have access to the Gero-Sys exercise room for low impact exercise. This room is equipped with low impact elliptical equipment and other exercise equipment that clients can use to help increase their

strength. Gero-Sys also employees an exercise specialist who is skilled with developing exercise regiments in accordance with each individual client’s needs. •

Dance Activities – All clients have access to our dance and music room. The exercise specialist has developed a dance-aerobics regiment as well as other low impact dance routines that our clients can use to assist in body strengthening and muscle movement. Our facility also offers dance classes that our clients can register for in advance.

•

Horticulture Therapy – Our facility offers plant and garden classes and therapy in which clients can take part. Our facility has a garden on the grounds that the clients and employees maintain.

•

Pet Therapy – Our facility is a supporter of the Pima County Humane Society. The humane society takes part in our pet therapy program by bringing many domestic animals, such as cats, dogs, birds, and other small animals to our facility to interact with our clients. Many private citizens of the city also bring their own pets to our facility for this purpose as well.

•

Art and Music Therapy – The local high school art and music teachers volunteer their time two days each week for painting, sculpting and many other art techniques. The music therapy consists of singing and playing instruments of a variety of types.

•

Cooking Skills – Many of our clients are still able to prepare foods for themselves and their families. We provide a cooking skills class twice weekly to help them learn techniques to ease their abilities in the kitchen.

•

Manicures and Hair Care – Our clients have access to our manicure and hair care service once weekly.

•

Health Monitoring – All of our clients will have health monitoring through our nurse practitioner. This includes blood pressure checks, blood glucose level checks, weight checks and various other monitoring needs based on the patient.

•

Medication Management – All clients shall have all medications monitored and dispensed by trained personnel.

•

Specialized Diets – Any clients who require a special diet will have access to the dietary specialist that our facility shares with our hospital partner.

•

Transportation – Clients who require transportation to physician office visits will have access to our van and bus services with prior notice.

•

Community Referrals – Our organization provides referrals to many of the community’s caregivers and other healthcare professionals.

•

Physical, Occupational, and Speech Therapy – Our organization partners with St. Mary’s Hospital to offer physical, occupational and speech therapy once weekly for our clients.

Hospital Analysis Tucson Hospital Market Before selecting a hospital to approach about a partnership for our new adult day care center in Tucson, a full analysis was compiled of all of the general medical and surgical hospitals in the area. Currently, there are six hospitals in Tucson; St. Joseph’s Hospital, St. Mary’s Hospital, El Dorado Hospital, Northwest Medical Center, Tucson Medical Center, and University Medical Center. They range in size from 90 beds to 533 beds. A full analysis of their performance and offered services was performed and compiled into a matrix. That full matrix is available in Appendix E. An analysis was also performed to determine the level of concentration in the hospital market in Tucson. Using admissions as a measure of market share, the Four Firm Ratio (FFR) was calculated to be 0.8019 and the Herfindahl-Hirschman Index (HHI) was calculated to be 1966. Both of these calculations are shown in Appendix F. While the HHI of 1966 might be interpreted to indicate a highly concentrated market when comparing all markets, in the hospital industry that is a relatively low measure of concentration. The market shares for all six hospitals are shown below graphically.

Tucson Hospital Market Share 0.3500

0.3000

Tucson

Fraction of Market

0.2500

0.2000

Northwest University St. Mary's

0.1500

St. Joseph's

0.1000

El Dorado 0.0500

0.0000

Based on this graph, the Tucson area has one large hospital, Tucson Medical Center, that exceeds every other competitor and one small hospital, El Dorado Hospital, which is much smaller than anyone else. The four remaining hospitals are tightly clustered in the middle. The competition among these four hospitals, Northwest Medical Center, University Medical Center, St. Mary’s Hospital, and St. Joseph’s Hospital should be fairly intense. St. Mary’s and St. Joseph’s both belong to the Carondelet Health Network, so the competition is probably very limited between those two hospitals. After reviewing that data and each hospital’s recent changes and current plans, the decision was made to approach St. Mary’s Hospital. The following section introduces St.

Mary’s Hospital and outlines the reasons for recommending a partnership with that hospital.

St. Mary’s Hospital After careful review of hospitals in the area, balancing their services and reputation with their location, St. Mary’s Hospital was selected as the prime candidate as a hospital partner for GeroSys in Tucson. Founded a century ago, St. Mary’s has grown from 12 beds to a 393-bed facility. The emergency room at St. Mary’s is the busiest in Tucson, averaging 1,200 ambulance visits per month. St. Mary’s also is the home of the only Burn and Wound Care Program in the southern part of the state. St. Mary’s is part of the Carondelet Health Network, which also includes St. Joseph’s Hospital, Holy Cross Hospital, and the Medical Mall in Green Valley. Currently, the Carondelet Health Network has more than 3,000 employees, 1,200 physicians with practicing privileges, and is one of the top 15 employers in the Tucson area. (Carondelet Health Network website)

St. Mary’s is located at 1601 W. St. Mary’s Road and as shown below has convenient access to both I-10.

Combining fiscal responsibility and the generous gifts from donors, St. Mary’s began a multi-million dollar renovation and construction campaign designed to promote a healthier community. These improvements provide the latest technology, an enhanced working environment, superior patient care, and new opportunities for local businesses.

New Technology additions include: •

2 CT Scanners

•

Nurse Call System & Cardiac Monitors in Critical Care

•

Gamma Cameras for Nuclear Medicine

•

Cardiac Catheterization Digital Equipment

•

13 Kidney Dialysis Machines

Construction and Renovations include: •

New Medical Records Department

•

New Gym/Inpatient Rehabilitation Unit

•

Outpatient Rehabilitation

•

Main Clinical Lab

•

Radiology Department

•

Spalding Cardiac Diagnostic Services

•

Emergency Department

Mission of Carondelet Health Network The mission of Carondelet Health Network is to provide for the health care needs of their community; to embrace the whole person, in mind, body and spirit; and, to serve all people with dignity.

Carondelet Health Network Values •

Service of the Poor – generosity of spirit, especially for persons most in need

•

Reverence – respect and compassion for the dignity and diversity of life

•

Integrity – Inspiring trust through personal leadership

•

Wisdom – integrating excellence and stewardship

•

Creativity – courageous innovation

•

Dedication – affirming the hope and joy of their ministry

The Vision of Carondelet Health Network •

Healthcare that Works – practicing evidence-based care and using the latest technology

•

Healthcare that is Safe – providing consistent and high quality services in a spiritually integrated and compassionate environment

•

Healthcare that Leaves No One Behind – partnering with others who share their commitment to healing and service.

St. Mary’s Hospital’s last accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) was effective April 27, 2005. According to JCAHO, in 2005, the hospital’s performance on heart attack care was similar to most other accredited organizations, while its treatment of heart failure patients and pneumonia patients exceeded that of most other accredited organizations. (JCAHO website) According to HealthGrades.com, a healthcare provider rating site, St. Mary’s hospital had 5-star ratings (the best) in in-hospital mortality for treatment of stroke patients, heart failure patients, atrial fibrillation, and community acquired pneumonia patients, as well as performing “as expected” in most other categories for which data was reported. (HealthGrades.com website)

Benefits of a Partnership with St. Mary’s Hospital •

Location – St. Mary’s is just blocks from I-10, a main artery in Tucson.

•

Technology – The hospital recently invested in the most state of the art technology.

•

Facilities – St. Mary’s invested millions in construction and upgrades to their facilities.

•

Space – St. Mary’s currently has excess capacity.

•

Network – St. Mary’s is part of the Carondelet Health Network offering GeroSys future growth opportunities in the area with the other network hospitals.

•

Services – The hospital has made investments in rehabilitation, cardiac, stroke, and dialysis services. These are just some of the services that would be beneficial to our adult day care clients.

•

Quality – St. Mary’s provides quality care that is nationally recognized by JCAHO and other quality rating organizations.

•

Creativity – Carondelet, like GeroSys, values creativity and innovation.

•

Holistic – In its mission, Carondelet supports going beyond just healing the sick, to help the entire person, mind and body.

•

Interest – Carondelet has expressed interest, through its vision, in partnering with other institutions to provide service and healing to the Tucson community.

Goals & Objectives •

Customer Focus -The services provided will be determined by the needs of the

individual. o Objective 1: Within two months after opening, we will give the clients a survey asking them what services we could add. o Objective 2: Within one year of being open, we will add 2 new services based on the survey. •

People Orientation - Gero-Sys shall treat all employees and clients as the most

important assets. o Objective 1: Within the first year we will have 3 dinners that we pay for the employees. o Objective 2: Within 6 months we will pick the client that is impacting the center the most and throw them a party. o Objective 3: Using a survey, evaluate the center at the end of the year to see how we are doing. •

System Integration - Our center shall be an integrated life-care delivery system

alongside St. Mary’s Hospital. o Objective 1: We will randomly contact employees of St. Mary’s within the first 3 months and ask them if they know who we are and if they are pleased with the services we offer. •

Community Care -This facility shall remain aware of the needs of the

surrounding communities which are served.

o Objective 1: We will attend at least 2 local community meetings by the end of the first year so that we are aware of what is happening in the community. o Objective 2: Give a seminar on how to care for the elderly and what options are available for the elderly within the first six months. •

Education -It is our goal to ensure proper education for individuals, such as

clients and caregivers, to assist them in providing the necessary services to offer our clients the highest quality of treatment. o Objective 1: We will provide 2 education sessions for caregivers on ways in which they can help their loved ones in the first year. o Objective 2: We will hold one seminar on caring for the elderly in the hospital in the first year. •

Financial Stability - Gero-Sys Adult Daycare will gain and maintain financial

stability. o Objective 1: We will break-even within the first year. o Objective 2: We will meet twice within the first year to discuss efficiency and how we can cut costs.

Timeline 7/1/06 – Apply for License from State 1/2/07 - Negotiate partnership deal with St. Mary’s Hospital (1 month) 1/2/07 - Plan marketing campaign for Tucson (1 month) 2/5/07 - Locate space (1 week) 2/12/07 - Plan and make adjustments to space if needed (1 month) 2/12/07 - Order equipment 2/12/07 – Begin to recruit employees (1 month) 2/19/07 - Implement marketing campaign 3/5/07 – Install equipment 3/12/07 - Open for Business 4/2/07 - Grand Opening 4/2/08 – Evaluate Start-Up and Performance

Human Resources Adult Day Care Director The person in this position identifies health, education and psychosocial needs of older individuals in the community and develops programs and activities for those that do not live in a long-term care or retirement facility. This position requires a bachelor's degree with at least 7 years of experience in the field. This individual is familiar with a variety of the field's concepts, practices and procedures, and relies on extensive experience and judgment to plan and accomplish goals. This person leads and directs the work of others. A wide degree of creativity and latitude is expected. This position typically reports to top management.

Medical Billing Clerk The person in this position is responsible for compiling amounts owed to the medical facility and reviewing and maintaining orders, invoices and records to ensure accuracy. They maintain all patient payment records. This position requires a high school diploma or its equivalent with 2 years of experience in the field or in a related area. This individual should have knowledge of commonly-used concepts, practices and procedures within the field of adult care or long term care. The person in this position works under immediate supervision. The primary job functions do not typically require exercising independent judgment.

Receptionist The person in this position greets vendors, customers, job applicants and other

visitors, and arranges for transportation services, when needed. They will also operate a switchboard to route incoming calls and place outgoing calls. This position requires a high school diploma or its equivalent with 0-2 years of experience in the field or in a related area. The individual shall have knowledge of commonly-used concepts, practices and procedures within the adult care field. This position relies on instructions and preestablished guidelines to perform the functions of the job and works under immediate supervision. The primary job functions do not typically require exercising independent judgment.

Medical Social Worker (MSW) The person in this position interviews, coordinates and plans programs and activities to meet the non-medical needs of patients and their families. They coordinate and plan with outside agencies and home care nursing staff for post-discharge care. This position requires a master's degree in social work and 2-4 years of experience in the field or in a related area. This person should be familiar with standard concepts, practices and procedures within the adult care field. They rely on experience and judgment to plan and accomplish goals. A certain degree of creativity and latitude is required for this position.

Nurse Practitioner The person in this position examines and treats patients independently and in autonomous collaboration with other health care professionals. They ensure proper illness and injury care and disease prevention, diagnosis, treatment and recovery. This position requires a master's degree in the area of specialty, national board certification as a nurse

practitioner in an area of specialty, 2-4 years of experience in the field or in a related area and licensure as a nurse practitioner. They shall be familiar with a variety of the field's concepts, practices and procedures. The individual relies on extensive experience and judgment to plan and accomplish goals and may lead and direct the work of others. A wide degree of creativity and latitude is expected in this position.

Medical Assistant The person in this position assists in examination and treatment of patients under the direction of a physician or nurse practitioner. They interview patients, measure vital signs (i.e., pulse rate, temperature, blood pressure, weight, and height) and record information on patients' charts. They may be required to draw and collect blood samples from patients and prepare specimens for laboratory analysis and prepare treatment rooms for examination of patients. This position requires a high school diploma, medical assistant certificate and 0-2 years of experience in a related field. This person shall be familiar with standard concepts, practices, and procedures within the adult care field. They rely on limited experience and judgment to plan and accomplish goals. This position will report to the nurse practitioner.

Certified Nursing Assistant - Long-Term Care The person in this position performs various direct patient care activities within a long-term care facility while under the supervision of the Nurse Practitioner. This position requires a high school diploma and certification from an accredited nursing assistant program. The person in this position shall be familiar with standard concepts,

practices and procedures within the adult care field. They rely on limited experience and judgment to plan and accomplish goals. They shall work under general supervision of the nurse practitioner.

Activity Specialist The person in this position organizes and provides program content for social events for an organization or group of people. This position requires a high school diploma or its equivalent and 2-4 years of experience in the field or in a related area. The individual should be familiar with standard concepts, practices and procedures within the adult care field. They will work under general supervision and report to the facility director. A certain degree of creativity and latitude is required for this position.

Bus Driver The person in this position provides transportation to passengers between regions or within metropolitan areas. They rely on instructions and pre-established guidelines to perform the functions of the job. This individual must be licensed to operate a bus. Licensing requirements depend on the state. They must also have a "satisfactory" driving record.

Exercise Specialist The person in this position identifies risk factors and designs specialized strength and conditioning programs for patients. This individual teaches patients on the proper exercise techniques and educates patient and family members on proper techniques for

transitioning a hospital-based fitness program to a safe and effective home exercise program. This position may require a bachelor's degree, certification as an exercise specialist, and 2-4 years of experience in the field or in a related area. This person must be familiar with a variety of the adult care concepts, practices, and procedures.

Tucson Area Income Levels by Profession Adult Day Care Director Medical Billing Clerk Receptionist Medical Social Worker Nurse Practitioner Medical Assistant Certified Nursing Assistant - Long-Term Care Activity Specialist Bus Driver Exercise Specialist

(Salary.com website)

25th %ile

Median

75 %ile

$48,517 $25,348 $23,206 $40,907 $66,080 $24,870

$58,181 $28,400 $25,611 $44,421 $71,024 $27,154

$70,362 $30,768 $28,493 $48,266 $76,404 $30,011

$19,950 $22,619 $14,305 $31,811

$22,020 $24,771 $16,527 $35,646

$26,103 $27,835 $19,736 $41,077

Synthetic Estimate Fee Structure Financial Analysis Break-Even Analysis Three Year Projection

Synthetic Estimate Source: Robert Wood Johnson Foundation 125 out of 10,000 age 65+ need day care National average of 38 persons per day care facility Number of elderly 65+ in Pima County 125,129 Number of elderly 65+ in Tucson 58,215 Number of elderly 55+ in Tucson 93,292 Number of married individuals in Pima County 329,850 (164,925 couples) Number of married individuals in Tucson 161,115 (80,557 couples)

Population 125,129 58,215 164,925 80,557

Need 125 125 125 125

Sample 10,000 10,000 10,000 10,000

Those in Need 1,564 728 515 252

Facilities Needed 41 19 14 7

County City County City

Method One Method Two

Fee Structure Rates at Gero-Sys are broken down to an hourly rate. Fees must be paid in advance for weekly care. If for any reason a client does not use our services for a time that has already been pre-paid, their account will be credited for this amount and applied to a future date of service. •

Basic Adult Care - (no specialized diet or care (i.e. – toileting, eating, bathing, etc necessary). Fees for an eight day per week, five days per week for basic adult care are $300 weekly ($60 per eight hour day / $7.50 per hour).

•

Specialized Adult Care - (specialized diet and/or care necessary). Fees for an eight day per week, five days per week for basic adult care are $350 weekly ($70 per eight hour day / $8.75 per hour).

•

Early drop-off or late pick-up is available with prior notice. There is a one hour maximum early drop-off and one hour maximum for late pickup. The charge is $15.00 per hour.

•

Gero-Sys offers a limited number of client spaces designated for those individuals and their families who are in financial need. These fees will be based on a sliding scale according to household income.

Gero-Sys requires that all potential clients undergo an assessment prior to being enrolled in our Adult Day Care facility to determine if their needs can be met by our center. This is a one time charge of $50 per client. Family caregivers should be prepared to present the client’s recent medical records and letter of referral from their primary care physician if available.

Financial Analysis Reserve The Gero-Sys home company has allotted $500,000 to the Tucson facility for start-up expenses. This loan shall be paid back with 7% interest. The money will remain in an account for the Tucson facility of Gero-Sys to access in case of any financial need during the next five years. Repayment of the interest portion will begin immediately. Repayment of the principal amount will begin in the second fiscal year for the Tucson facility of Gero-Sys.

Salaries Estimations for the direct expenses for Gero-Sys Adult Day Care Center were obtained by utilizing the costs of a new outpatient clinical operation that recently opened. Salaries were obtained from salary.com for the Tucson area and averaged for the level of work that will be required at Gero-Sys. Salary Breakdown Adult Daycare Director Billing Coordinator/Financial Counselor Receptionist/Secretary Social Worker (Homecare Long term) Nurse Practitioner Medical Assistant x2 Certified Nurses Assistant x10 FT Certified Nurses Assistant x 5 PT Activity Specialist Transportation Specialist x1 PT Exercise Specialist TOTAL

54,000 27,000 25,000 44,000 70,000 50,000 200,000 50,000 23,000 9,000 33,000 585,000

Projected Monthly Expenses Salaries Employee Benefits Lost Revenue Rent/Lease Expense Loan/Interest Expense Utilities Medical Supplies Office Supplies Dietary Supplies Transportation Expense Marketing Expense Other Misc Expenses

585,000 135,000 12,000 42,000 35,000 24,000 3,600 2,400 120,000 20,000 3,600 1,000 Total 983,600

Estimated Revenue Geo-Sys Adult Daycare Center Tucson, Arizona Capacity: 100

WEEKLY Charge Charge (low) (high) 300 350 Full Capacity (100) 30,000 35,000 ESTIMATED YEAR TOTAL 1,560,000 1,820,000 Estimated Capacity (65) 19,500 ESTIMATED YEAR TOTAL 1,014,000

22,750 1,183,000

ESTIMATED YEAR REVENUE 1,098,500

The estimated yearly revenue was calculated using the estimated capacity of sixty-five clients at the low charge and the high charge and averaged Æ (1,014,000 + 1,183,000)/2.

Net Income Estimated Yearly Revenue Estimated Yearly Expenses Yearly Income

1,098,500 956,600 141,900

Yearly income equals 10% of estimated yearly revenue.

Break-Even Analysis Monthly Fixed Expenses Salaries Employee Benefits Lost Revenue Rent/Lease Expense Utilities Loan/Interest Monthly Total Daily Total

48,750 11,250 1,000 3,500 2,000 2,917 69,417 3,155

Variable Unit Cost (based on maximum occupancy of 100 clients per day) Dietary Supplies (average) Transportation Marketing Expense Medical Supplies Office Supplies Misc Supplies Total Variable Unit Cost per client per day Total Variable Unit Cost per client per Year

4.62 0.77 0.14 0.14 0.09 0.04 5.79 1,506.00

Variable Unit Cost (based on expected occupancy of 65 clients per day) Dietary Supplies (average) Transportation Marketing Supplies Medical Supplies Office Supplies Misc Supplies Total Variable Unit Cost per Client Total Variable Unit Cost per Client per Month (Break Even = Fixed Cost / (Unit Price - Variable Unit Cost)) Break Even = 3155 / (60-5.79) Break Even = 3155 / 54.21 Break Even = 58 Clients per day

7.10 1.18 0.21 0.21 0.14 0.06 8.91 2,316.92

Three Year Projection Budgeted Expenses

Salaries Employee Benefits Lost Revenue Loan/Principal Expense Rent/Lease Expense Loan/Interest Expense Utilities Medical Supplies Office Supplies Dietary Supplies Transportation Expense Marketing Expense Other Misc. Expenses Total

FY 1

FY 2

FY 3

585,000 135,000 12,000

602,550 139,050 13,680

620,627 142,526 14,638

0 42,000 8,000 24,000 3,600 2,400 120,000

100,000 42,000 8,000 24,000 4,100 2,760 135,000

100,000 42,000 8,000 24,000 4,300 3,000 145,000

20,000 20,500 21,000 3,600 3,600 3,100 1,000 1,000 1,000 956,600 1,096,240 1,129,190

Budgeted Revenue Client revenue Projected Income

65 clients 75 clients 80 clients 1,098,500 1,176,500 1,352,000 141,900 80,260 222,810

A – Arizona & Tucson GIS Maps B – Arizona Demographics C – Tucson Demographics D – Disease, Disability, & Risk Factors E – Hospital Information Matrix F – Hospital Market Concentration Calculations G – License Application H – License Application Checklist I – Construction/Renovation Application J – License Renewal Application

APPENDIX A

Arizona & Tucson GIS Maps

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

Source: http://datawarehouse.hrsa.gov/NSSRN.htm , site changed since April 15, 2006, so output generated might look different from the one above.

APPENDIX B

Arizona Demographics & Long Term Care Trends

Source: US Census Bureau, December 2005, 65+ in the United States: 2005

General Demographic Characteristics:

People QuickFacts Population, 2003 estimate Population, percent change, April 1, 2000 to July 1, 2003 Population, 2000 Population, percent change, 1990 to 2000 Persons under 5 years old, percent, 2000 Persons under 18 years old, percent, 2000 Persons 65 years old and over, percent, 2000 Female persons, percent, 2000

Tucson 507,658 4.2% 486,699 16.7% 7.2% 24.6% 11.9% 51.0%

Arizona 5,580,811 8.8% 5,130,632 40.0% 7.5% 26.6% 13.0% 50.1%

White persons, percent, 2000 (a) Black or African American persons, percent, 2000 (a) American Indian and Alaska Native persons, percent, 2000 (a) Asian persons, percent, 2000 (a) Native Hawaiian and Other Pacific Islander, percent, 2000 (a) Persons reporting some other race, percent, 2000 (a) Persons reporting two or more races, percent, 2000 Persons of Hispanic or Latino origin, percent, 2000 (b)

70.2% 4.3% 2.3% 2.5% 0.2% 16.8% 3.8% 35.7%

75.5% 3.1% 5.0% 1.8% 0.1% 11.6% 2.9% 25.3%

Living in same house in 1995 and 2000', pct age 5+, 2000 Foreign born persons, percent, 2000 Language other than English spoken at home, pct age 5+, 2000 High school graduates, percent of persons age 25+, 2000 Bachelor's degree or higher, pct of persons age 25+, 2000 Mean travel time to work (minutes), workers age 16+, 2000

42.8% 14.3% 32.6% 80.4% 22.9% 21.6

44.3% 12.8% 25.9% 81.0% 23.5%

Housing units, 2000 Homeownership rate, 2000 Median value of owner-occupied housing units, 2000

209,609 53.4% $96,300

2,189,189 68.0% $121,300

Households, 2000 Persons per household, 2000 Median household income, 1999 Per capita money income, 1999 Persons below poverty, percent, 1999

192,891 2.42 $30,981 $16,322 18.4%

1,901,327 2.64 $40,558 $20,275 13.9%

24.9

Business QuickFacts Manufacturers shipments, 1997 ($1000) Wholesale trade sales, 1997 ($1000) Retail sales, 1997 ($1000) Retail sales per capita, 1997 Accommodation and foodservices sales, 1997 ($1000) Total number of firms, 1997 Minority-owned firms, percent of total, 1997 Women-owned firms, percent of total, 1997

Tucson 3,483,559 1,801,002 5,370,201 $11,707 704,694 33,805 19.0% 28.2%

Geography QuickFacts Land area, 2000 (square miles) Persons per square mile, 2000 FIPS Code Counties

Tucson Arizona 195 113,635 2,500.1 45.2 77000 4 Pima County

Source: US Census Bureau

Arizona 43,030,348 45,899,068 43,960,933 $9,657 6,634,744 329,031 13.2% 27.0%

Source: Flowers L, Grosss L, Kuo P, and Sinclair A, 2005, State Profiles 2005, Reforming The Healthcare System, AARP Public Policy Institute, 13th Edition

Source: Flowers L, Grosss L, Kuo P, and Sinclair A, 2005, State Profiles 2005, Reforming The Healthcare System, AARP Public Policy Institute, 13th Edition

Source: Flowers L, Grosss L, Kuo P, and Sinclair A, 2005, State Profiles 2005, Reforming The Healthcare System, AARP Public Policy Institute, 13th Edition

Source: Flowers L, Grosss L, Kuo P, and Sinclair A, 2005, State Profiles 2005, Reforming The Healthcare System, AARP Public Policy Institute, 13th Edition

APPENDIX C

Tucson Demographics

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Population Change in Tucson City:

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Population projection:

Source: Compiled from Arizona Department of economic Security, Research Administration, Population Statistics Unit, 2006

Geographic Mobility:

Educational Attainment:

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Household Types:

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Income Characteristics

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Poverty Level:

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Industry and Labor Force Characteristics:

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

APPENDIX D

Disease, Disability & Risk Factors

Behavioral Risk Factors among Older Adults:

Source: BRFSS, 2000

Source: BRFSS, 2005

Disability:

Source: Compiled from statistical releases of Arizona Department of Health

Source: Census 2000: The Basics, Planning Department, City of Tucson Arizona

People with Disability Who Seek Health Care Services:

Source: Arizona Department of Health Services, July 2005, 2004 Behavioral Risk Factors of Arizona Adults

Leading Causes of Death and Hospitalization

Source: Arizona Department of Health Services, July 2005, 2004 Behavioral Risk Factors of Arizona Adults

APPENDIX E

Hospital Information Matrix

St Mary’s Hospital • Part of Carondelet Health Network which also includes: ¾ St. Joseph’s Hospital ¾ Holy Cross Hospital ¾ Medical Mall in Green Valley • Mission, Vision, & Values in line with Gero-Sys • Excellent performance outcomes according to both JCAHO and HealthGrades.com • Has more than – ¾ 3,000 employees ¾ 1,200 physicians with practicing privileges ¾ One of the top 15 employers in Tucson area New Technology additions include: Construction and Renovations include: • 2 CT Scanners • New Medical Records Department • Nurse Call System & Cardiac Monitors in Critical Care • New Gym/Inpatient Rehabilitation Unit • Gamma Cameras for Nuclear • Outpatient Rehabilitation Medicine • Cardiac Catheterization Digital • Main Clinical Lab Equipment • Radiology Department • 13 Kidney Dialysis Machines • Spalding Cardiac Diagnostic Services • Emergency Department Gerosys Services: • Adult Supervision Formal Low-Impact Exercise • Horticulture Therapy • Pet Therapy • Art and Music Therapy • Cooking Skills • Manicures and Hair Care • Health Monitoring • Medication Management • Specialized Diets • Transportation • •

Community Referrals Physical, Occupational, and Speech Therapy

Competitor Profile:

Beds Initial Assessment Memory Impaired Develop Disabled Transportation Meals Scheduled Activities Scheduled Outings Exercise Medical Assistance Prescription Help In-facility therapies Personal Care Counseling/Support Education Link to hospital Asst Living/LTC Care Management

Handmaker Adult Day Care 100 X X X X X X

Day Break Adult Day Care 44

X X X X

X X X X X

X X X X

X X

X X

APPENDIX F

Hospital Market Concentration Calculations

Tucson Hospital Market Share 0.3500

0.3000

Tucson

Fraction of Market

0.2500

0.2000

Northwest University St. Mary's

0.1500

St. Joseph's

0.1000

El Dorado 0.0500

0.0000

APPENDIX G

License Application

Source and Additional Information: http://www.azdhs.gov/als/forms/hclinitialapp.pdf

Source and Additional Information: http://www.azdhs.gov/als/forms/hclinitialapp.pdf

Source and Additional Information: http://www.azdhs.gov/als/forms/hclinitialapp.pdf

APPENDIX H

License Application Checklist

Source: http://aspe.hhs.gov/daltcp/reports/adultdayAZ.pdf

Source: http://aspe.hhs.gov/daltcp/reports/adultdayAZ.pdf

Source: http://aspe.hhs.gov/daltcp/reports/adultdayAZ.pdf

APPENDIX I

Construction/Renovation Application

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

Source and Additional Information: http://azdhs.gov/als/forms/hclarapp.pdf

APPENDIX J

License Renewal Application

Source & Additional Information: http://azdhs.gov/als/forms/allreapp.pdf

Source & Additional Information: http://azdhs.gov/als/forms/allreapp.pdf

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