National Rehabilitation Centers, Case Study Example

National Rehabilitation Centers (NRC) is a leading outpatient rehabilitation provider with sites located nationally and internationally. Historically NRC strives to keep costs at a minimum while providing top quality care to patients. This quest has earned NRC the reputation for being a leader in the rehabilitation industry. To further provide services for individuals in need, the organization is currently investigating options for additional services to be implemented throughout the various locales across the globe.

NRC currently provides help for injuries and medical conditions which require rehabilitative processes. The staff is proactive in getting the patients to become involved in the treatment and procedures to aggressively get them functional and self sufficient when possible. Currently treatments revolve around neurological problems, bone injuries, nerve damage, muscle weakness, amputees, stroke, cardiac, and geriatric issues. Consideration for adding a sports medicine program is believed to be needed and achievable.

The addition of a sports medicine program would facility the availability of specialized physicians dedicated in sports medicine and exercise science to screen, diagnosis, treat and teach prevention of sports related injuries and promote the advancement of the science of exercise (American College of Sports Medicine, 2007). Quality of life is a goal of NRC and adding this element would further provide patients with sports injuries the opportunity to benefit from the high quality services of NRC.

The inception of sports medicine began in the 1970s as surgeon Frank Jobe developed an elbow-repair technique to treat a baseball professional. This began the subspecialty of sports medicine for a select number of physicians to focus their practices (Altman, 2008). Given the growth of sports medicine programs, NRC would benefit from the creation of a sports medicine program. NRC has to date spent $7 million to begin the development of the program.

Proposal A covers the concept of immediate expansion with a sizeable investment to renovate 1,000 sites at $400,000 per site resulting in $400 million upfront investment. The rate of return is expected to be 20 to 25 percent. Proposal B is a staged entry involving two stages. The more costly of the two concepts, this proposal would break down the sites into roughly half and begin implementation on the first set of sites to ascertain the profit margins and overall acceptability in the various communities. Under this proposal $7 million is allocated.

By choosing proposal B and using staged entry implementation NRC will be in a better financial forecasting position to know if the addition of sport medicine programs is feasible and profitable. NRC’s marketing department has projected a 50/50 chance of demand positive versus negative outcomes. Poor outcome is forecast at $40 million the first year of operations while a good forecast is at $60 million; with an increase of six percent each year is accepted and only three perfect if the program is not successful.

Based on these figures a rough estimate for profits can be seen in terms of the following scenario:

Entering the program and determining the risk probability is unknown. This is the benefit of entering into a staged program. New information becomes available chronologically as the program progresses. Bruce Barkley (2007) promotes two major risks to new developments including the program not aligning with the needs, or the program will not work for the population (p. 233).  Stage 1 of proposal B is a trial proposition whereas proposal A requires immediate implementation of construction and faculty recruiting. Proposal A of NRC details benefits from the seamless entry with overall implementation of the program. The unknown variable of whether the program can withstand the two risks of community and population needs should be taken into consideration. Further benchmarking and community surveys could be performed to assist in determining the needs of the community and industry.

Proposal B is the best option for NRC and the use of staged entry procedures to spread out the financial burden and benefit from the forecasting options staged entry provides. Should the program not succeed, abandonment during a staged entry is easier and less costly over large upfront investment options in proposal A. The Board of Directors will have time to monitor and the program for profit and loss margins. Staging provides an infrastructure for construction and implementation of staff, faculty and therapist.

Considering the best avenue to pursue financially is risky, however, careful planning and forecasting will help in minimizing mistakes and loss. Dr. David Walonick (1993) states “forecasts empower people because their use implies that we can modify variables now to alter (or be prepared for) the future” (p 1). NCR will benefit from staged entry and the use of benchmarking and forecasting in the decision to pursue a sports medicine program addition.

References

Altman, Alex. (2008). A brief history of sports medicine. Time Magazine Online. Retrieved from http://www.time.com/time/magazine/article/0,9171,1840568,00.html

American College of Sports Medicine, (2007).  Advancing health through science, education and medicine.  Retrieved November 9, 2009 from http://www.acsm.org/AM/Template.cfm?Section=About_ACSM

Barkley, Bruce. (2007). Project management in new product development.  McGraw-Hill, New York, NY.  Retrived November 9, 2009 from http://books.google.com/books?id=JxIXgbLCrmwC&pg=PT266&lpg=PT266&dq=new+project+staged+entry&source=bl&ots=YY-GKt-bWm&sig=ngHk0_vNQKVcVBTY28ZPN1LV_WE&hl=en&ei=5VD4StvfMIbU8AbAtrzzCQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CBoQ6AEwCQ#v=onepage&q=&f=fale

Walonick, David. (1993). An overview of forecasting methodology. Retrieved November 9, 2009 from http://www.statpac.com/research-papers/forecasting.htm.