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MOD005487: Critical Analysis - Managing New Life Private Healthcare (Group) Plc - Operations & Finance Management Assignment Help
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Internal Code: 3DGJ
Task:
Managing New Life Private Healthcare (Group) Plc
Scenario: New Life Private Healthcare Plc You are the business service manager of the New Life Private Healthcare (Group) Plc which is has successfully won a large number of primary care delivery contracts across the UK. They seek to challenge the market position of Virgin Healthcare in all elements of the market. The group is profitable and has an average cost of capital of 7% . Group CEO, Professor Sobia Schburt is keen to expand the group operations into the private nursing residential care market and are currently focusing upon East Anglia, and have identified a two potential locations, the first is in Suffolk and is a property offered for sale and the second is in Norfolk where the property is offered under a 25 year lease. The Board have decided not to proceed with the lease option as the Suffolk project has potential financial support from the local health and social care partnerships; even though Norfolk option produced a net present value in excess of £4m over 5 years. The proposed building will provide for a 50 bed unit with occupancy rates vary from 80%-95%. Any decision must be normally be financially viable within 5 years. The NHS will pay for 10 beds and Social Services 20 beds. If Social services are selected as the preferred partner then the highest occupancy rate is more likely to be achieved. To guide you the Board set out some broad parameter for you to consider within your report:- Legal and regulatory factors to be considered,
- Operational issues and restrictions including expectations and performance measures to be used by the Board to measure success of the project.
- A critical review of the investment opportunity. You should include recommendations for pricing per bed day and your recommendation included in your investment appraisal
- Critical evaluation of associated risks
- Proposed service performance measures.
- Clear recommendation to the Board whether to collaborate with public sector contributors or to run all 50 beds commercially.
- Cost of purchase in Suffolk £12,000,000. The building life is expected to be 20 years, Depreciation will be calculated in a straight line basis.
- Equipment lease, renewable every 5 years, £500,000 pa with an expectation these costs will increase by 10% at each review.
- Staffing costs £5,720,000 pa regardless of location
- Building maintenance costs for Suffolk, £500,000 pa
- Other operations costs are £1,000,000
- Group Margins are, on average, set at 10%
- The NHS Foundation Trust and Social Services are both prepared to pay 10% of the capital costs and seek a bed per day discount of 30% for 10 beds each.
- By working with Social Services you will save £100,000 in operating costs
- a) An evaluation of operational and regulatory factors to be considered by the board
- b) Estimate the Income and Expenditure projections, incorporating any operational and regulatory costs you feel the proposal may be missing and estimate the potential price per bed day to achieve group margins.
- c) A critical evaluation of the financial worth of the current proposal AND an alternative evaluation including all costs and revenues you deem to be appropriate.
- d) A detailed and fully evaluated conclusion with clear recommendations for the board to consider For assessment purposes marks will be awarded for style, layout and structure