Industry Description and Outlook
As it relates to the total United States population, the number of elderly people in this country will grow rapidly over the next four decades. Post-World War II baby boomers, the subsequent slowing of birth rates and a declining overall mortality rate are
major contributing factors, according to the Congressional Budget Office (2013). The passage of the Patient Protection and Affordable Care Act (2012) has increased focus on the importance of developing care models such as Adult Day Services has become more essential to meet the needs of this growing population of elders.
Wagner (2015) contends that the growth rate within the adult daycare center industry is based on the growing number of people that are getting older and will require some form of community-based solutions such as those offered by daycare centers. Wagner further suggests that the Patient Protection and Affordable Care Act places more pressure on developing daycare centers to handle the growing influx of people that are relying on Medicare to manage their chronic illnesses. Children of adults that need the services are also one of the targeted markets, since the impact on their families’ lives makes them seek adult day services (Wagner, 2015).
Aging Well Day Care Center (AWADCC) will focus on alleviating most or some of the demands for elder care. The Center will provide a safe environment that offers non-medical care and various social activities for the elder community in Murrieta, California. The Center will be a non-residential facility that operates 10-12 hours daily. The Center will provide a stimulating environment, daily meals and snack with general supervision. Overall, this business plan will concentrate on the lack of services within this region and that adequate resources are available to maintain a viable business. In the United States, a growing number of adults have the dual responsibility of raising a family and providing care for their aging parents. Adults within these categories are often referred to as the “sandwich generation caregiver” (SGC), which means being a parent to an aging parent as well as a parent to dependent children (Dobson, 2013).
According to Dobson (2013), “Approximately 66 million Americans care for their children, spouse and at least one parent” (p. 1). The support that caregivers provide can involve assistance with activities of daily living (ADLs), trips to the doctor, medication management and help with legal matters as well as spiritual and emotional health. The demands for care giving can cause enormous stress on individuals whether willing or not, who become a member of the sandwich generation (Dobson, 2013). Although care giving for an aging parent can be rewarding, it can also cause those caregiver to experience burnout syndrome (Tunajek, 2010). The stress and strain on a caregiver’s own emotional, physical and spiritual health can undoubtedly become overwhelming. These feelings can lead to stress and/or depression but eventually will result in them becoming burned-out (American Association of Retired People, 2012).
AWADCC plans to offer relief to caregivers to preclude them from becoming burned-out, while simultaneously allowing them the freedom to work outside the home, the flexibility to handle personal affairs, or just unwind, while knowing that their loved ones are being cared for in a secure and emotionally stimulating environment. This type of adult social day care center could also enhance the livelihood of seniors living alone. The Center will provide care and companionship for seniors who require assistance or guidance during the day. The hours of operation will be during the traditional business working hours, 9 a.m. to 5 p.m., and 5 days per week.
The services offered will include medication reminder, grocery shopping, a daily hot balanced meal and healthy snack, providing health enhancing physical activities and arranging a social calendar. AWADCC will help assist with arranging transportation to and from the center as well as transporting clients to area physicians, dental and/or optometry appointments. AWADCC will also offer caregivers support groups, provide valuable information on issues such as behavior management, create a safe home as well as provide the opportunity to connect with others who are experiencing similar situations. The support group could also be an effective resource for counseling and guidance when seeking access to other community resources.
Super (2015) noted that during the conference on Aging, President Obama announced a proposal that included $102.5 million for the Administration on Aging’s Caregiver Initiative, to support adult children taking care of their elder parents at home. This proposal includes $52.5 million in funding for caregiver support programs that provide temporary respite care, counseling, training, and referrals to critical services. According to California Department of Social Services (2015), the additional resources will allow nearly 200,000 caregivers to receive assistance and subsidize the increased demand for respite care. The provision will allocate $50 million for programs that provide transportation help, adult day care, and in-home services, such as aides to help seniors bathe and cook, help which eases the burden for family members and helps seniors stay in their homes. In a market survey conducted by Metropolitan Life Insurance Company and Mature Market Institute (2012) in conjunction with LifePlans, Inc. conducted a market survey on the cost of on adult day services (ADC). This survey called attention to the significant growth in the number of Adult Day Service Centers in the United States in recent years. Based on the information provided there are more than 4,600 Adult Day Services (ADS) centers nationwide, that is a 35% increase since the program was pioneered in 2002. The study that was conducted by Metropolitan Life Insurance Company and Mature Market Institute created an alliance between the National Adult Day Services Association (NADSA) and Ohio State University, College of Social Work.
Results from the study conclude that nearly 260,000 individuals utilize ADS centers. This is a utilization increase of more than 100,000 since 2002. The study further concluded that 29% of centers have a waiting list and that 58% of the clients are women
and 30% are under the age of.
Target Market and Size
The target market for AWADCC will be the senior segment of the population and their families. The main goal is to attract clients that can afford the service. As previously noted, 58% of women were active participants in adult day programs and 70%
of participants were age 65 and above. An initial center will be a stand-alone facility located in the city of Murrieta, California. Murrieta is sculptured around and intersected by two major thoroughfares, I-15 and I-215. On average, the city is located within a 10 miles radius of growing communities such as Wildomar, Menifee, Lake Elsinore and Temecula. The statistics from the U.S. Census Bureau (2013) report a population of 107,476 of which 10.10% are age 65 or older, additionally the report notes that women account for 51.2% of the population. The median household income is $74,496 and 69.2% of the residents are homeowners. A particularly vital segment of the target market will be seniors living on their own as well as working caregivers, responsible for providing care to an aging parent. Dobson (2013) further reports employed caregivers are less likely to attend careerrelevant training, often cut corners at work, are more likely to call in sick, over utilize employee benefits, be less productive and devote fewer hours to work.
Pricing and Gross Margin Targets
Reasonable and fair pricing as well as superior service will position AWADCC to be competitive in the market place. According to the Metropolitan Life Insurance Company and Mature market Institute (2012) the average fee for service is $61.71 per day. However, recent data endorsed by California Association for Adult Day Services (2013) supports a fee of $76.27 per day. Clients can purchase a monthly pass for $1,200; this would be a monthly savings of $300. The proposed pricings are as follows.
1. $75 for a 1-day pass
2. $140 ($150 value) for a 2-day pass
3. $210 ($225 value) for a 3-day pass
4. $275 ($300 value) for a 4-day pass
5. $340 ($375 value) for a 5-day pass
This business plan will also offer companion sitting on a walk-in basis. This service is available to those clients that prefer to attend the center on an hourly basis. The rate is $25 per hour for a minimum of 2 hours. Consequently, the American Association of Retired People (2012) suggests that services at an adult day care center are not usually covered by insurance such as Medicare. Financial assistance may be available through federal or state programs (e.g., Medicaid, Older Americans Act, and Veterans Administration). AWADCC will also pursue additional funding through private and community donations as well as seek talented volunteers to assist in the enrichment of the lives of our clients. The purchase of a monthly pass entitles the client to the following services:
1. A hot, nutritious lunch along with a healthy snack
2. Daily healthy enhancing physical activities
3. Board games such as Battle Ship, Bingo and other mind stimulating activities
4. Art projects
5. Monthly birthday celebrations
6. Dancing and interactive activities
7. Individual personal care plan
8. Assurance of personal safety with caring supervisor
9. Health information classes and support group
10. Access to secure outdoor flower garden, vegetable garden and relaxing patio area.
11. Showering facility available for an extra fee
12. Clients will have Internet access to view a monthly calendar to best determine preferable attendance dates.
The purchase of a monthly pass also entitles the client’s caregiver to the following services:
1. Individual counseling
2. Weekly support groups with care provided for loved one during the time of the meeting at no additional cost
3. Educational lectures and material
4. Referrals to other community resources
Assuming the facility is at or near capacity of 40 clients attending 3 days per week for a fee of $210, potential gross revenue would be $436,800. AAADCC will have both fixed cost and variable cost, total cost is projected to be approximately 40% of the
gross revenue. Therefore, the net profit is estimated to be $174,720 annually. Additional details of the financial analysis will be provided in later chapters.
Competition and Strategy
The market concentration for adult day care services is relatively low. Data from the California Department of Social Services (2015) discloses that there are 36 licensed adult day program facilities currently operable with an additional six pending licensing. Of those currently licensed, four of those facilities are located in the targeted demographics. The city of Temecula has a total of three facilities; two of those facilities have a capacity of 60 people and one has a capacity of 45 people (California Healthcare Foundation [CHF], 2015). Additionally, there is one facility located in the city of Menifee which has a facility capacity of 45 people. CHF (2015) furthermore suggests that facilities that are located within the targeted demographics such as Westview Field Adult Development Center, Kaiser Adult Behavioral Center and Community Crossing are not considered a direct competitor of AWADCC since their services are intended for adults with development disabilities. In Riverside County adult day programs’ capacity ranges are estimated to be as high as 250 people and as low as six people according to California Department of Social Services (2015).
Aging Well Adult Care program can capture a percentage of the market by providing reasonable and affordable pricing in conjunction with its exceptional personalized care. Clients will be allowed the flexibility of selecting a schedule that meets their personal needs. All forms of effective communication to build our brand name in concert with a reputation in the market place will be used. Initially our market efforts will be to place maximum efforts toward identifying the target audience and those that work directly with seniors. An important strategy will be to establish our credibility as a trustworthy organization that will provide high-quality care for the elderly in the community.
Executive staff members will join community organization such as the local Rotary Club and Chamber of Commerce. In addition the staff will sponsor community events and provide monthly presentations at senior activity centers. AWADCC will intensify marketing strategies through local radio stations, city webcast video networks and classified advertising. Another strategy will be to contact a substantial percentage of the senior population and their families through internet communications.
In a pamphlet written by Tooker (2010), 22% of consumers 65 and older use the internet regularly, a 20% increase over the past 10 years. Tooker further suggests that 66% of those seniors use the internet to search health and medical information.