HomeMy WebLinkAboutOIH Summary of Assumptions v2 0OUR ISLAND HOME
Summary of Assumptions
Associated with the Financial Projections dated December 16, 2016
Page | 1
MAIN ASSUMPTIONS
The assumptions utilized in the financial projections dated December 16, 2016 are summarized
below and are based on:
Management’s 2016 budget for the existing facility;
Pricing program for the Project, four 10‐unit small houses comprised of one Rest Home and
three Skilled Nursing houses;
Staffing scenario for the Project;
Development program for the Project; and
Management’s financing scenario
DEVELOPMENT ASSUMPTIONS/TIMELINE
Unit Type
Number
of Units
Square Feet Per House 8,750
Units Per House 10
No. of Houses ‐ SNF 3
No. of Houses – AL‐MC 1
Total Units/Beds 40
Total Square Feet 35,000
Project Timeline
Current – September 2017 Development activities (planning,
entitlements, architecture, etc.)
September 2017 Close on Financing
September 2017 – December 2018 Construction (16 months)
January 1, 2019 Project Available for Occupancy
OUR ISLAND HOME
Summary of Assumptions
Associated with the Financial Projections dated December 16, 2016
Page | 2
DETAILED OPERATIONS ASSUMPTIONS
Stabilized Occupancy and Fill Up
Rest Home
The proposed, new Rest Home Units are forecasted to be available for occupancy in
January 2019.
Stabilized occupancy of 92% (or 9.2 units) is projected to be reached in January 2019.
Skilled Nursing
The proposed, new Skilled Nursing Beds are forecasted to be available for occupancy in
January 2019 and fill up upon opening.
Stabilized occupancy of 95% (or 28.5 units) is projected to be reached in January 2019.
The first fully stabilized year of occupancy is FY2020.
Daily Service Fees and Payer Mix
It is assumed that residents of the Community will pay a Daily Service Fee (per diem rate).
Management has assumed that approximately 90% of the Rest Home residents will be MassHealth
(Medicaid) payers; the remainder will pay a private pay rate. Management also assumes that 75%
of the Skilled Nursing residents will be Medicaid payers, 20% will be private payers, and the
remaining residents will be Medicare payers (5%). Daily service fees, payer mix, and occupied units
are presented below, inflated to FY2020 dollars:
Unit Type/Payer Type
Payer
Mix
Number
of Residents
Daily Service Fees
(FY2020 $)
Rest Home
Private Pay
Medicaid/MassHealth
10%
90%
0.92
8.28
$ 337.65
129.90
Rest Home Occupied Units/
Average Fees
100%
9.20
$150.69
Skilled Nursing
Private Pay
Medicaid/MassHealth
Medicare
20%
75%
5%
5.69
21.38
1.43
$ 517.73
222.20
378.85
Skilled Nursing Occupied Units/
Average Fees
100%
28.50
$289.06
OUR ISLAND HOME
Summary of Assumptions
Associated with the Financial Projections dated December 16, 2016
Page | 3
Revenue Inflation Rates
The following annual revenue inflation rates are applied in July of each year:
Rest Home private pay rates 3.0%
Rest Home Medicaid rates 2.0%
Skilled nursing private pay rates 3.0%
Skilled nursing Medicaid rates 2.0%
Skilled nursing Medicare rates 2.0%
Operating Expenses
Operating expenses were generated from analysis of the 2016 operating budget and adjusted for
the small house model. Variable costs, such as utilities and food costs, are projected to fluctuate
with occupancy. Staffing is projected as follows, based on discussions with management:
Staffing
Positions
Business office coordinator
Administrative assistant
Director of nursing
Administrator
Social worker
Medical records
Staff development coordinator
Dietician
Nurses – Skilled Nursing
CNAs – Skilled Nursing
Nurses – Rest Home
CNAs – Rest Home
Activity workers
Food service supervisor
Dining staff
Maintenance
Housekeeping
Laundry
Administrative nurse
1.0
1.0
1.0
1.0
0.8
0.4
1.0
1.0
2.4
19.0
0.7
2.8
1.6
1.0
1.0
2.0
1.9
1.7
1.0
Total 42.3
Staffing costs (wages and benefits) comprise 65% of total operating expenses, or approximately
$3,739,000 in 2020. Benefits are assumed to equal 25.0% of wages. Historically, benefits have
ranged from 22.7% to 27.6% of wages, with an average of 24.8%.
OUR ISLAND HOME
Summary of Assumptions
Associated with the Financial Projections dated December 16, 2016
Page | 4
Non‐staffing costs comprise 35% of total operating expenses, or approximately $2,000,000 in 2020.
Included in this is approximately $645,000 for Barnstable County Retirement, $218,000 for utilities,
and $593,000 for professional services.
Operating expenses are assumed to increase by 3.0% annually.
Per Patient Day Analysis
The following illustrates the projected expenses on a per patient day (PPD) basis for FY2020:
Routine Capital Expenditures
Routine capital expenditures are projected at $40,000 in 2020. Beginning in 2021, this amount is
inflated 3.0% annually.
Operating Expense ‐ PPD Detail
FY2020
SNF Rest Home Total PPD
Beds 30 10 40
FTEs 38.80 3.50 42.30
Patient Days 10,403 3,358 13,761
Expenses
Salaries & Benefits 3,452 287 3,739 271.71
Barns Cty Rtrmt 592 53 645 46.87
Contractual Oblig 40 13 53 3.85
Utilities 165 53 218 15.84
Repairs & Maint ‐ ‐ ‐ ‐
Food 126 41 167 12.14
Prof Svcs ‐ SNF 415 ‐ 415 30.16
Prof Svcs ‐ Other 135 43 178 12.94
Medical Supplies 82 26 108 7.85
General Insurance 64 21 85 6.18
Other Supplies 53 17 70 5.09
Other Expenses 85 27 112 8.14
Total Expenses 5,208 582 5,790 420.75
OUR ISLAND HOME
Summary of Assumptions
Associated with the Financial Projections dated December 16, 2016
Page | 5
PROJECT FINANCING – CAPITAL STRUCTURE
The project budget, which includes four 10‐unit small houses, totals approximately $
million. Construction is assumed to begin in September 2017 and continue for 16 months, with
occupancy beginning in January 2019.
The project is proposed to be financed with long term debt, which is assumed to close in September
2017. It is anticipated that the loan would be in place for 20 years. For purposes of the projections,
an interest rate on the debt of 3.50% was assumed. Interest costs are projected to total $
million over the life of the loan.
A sources and uses table for the project is provided below.
Sources and Uses of Funds (in thousands)
Project
Sources:
Senior debt
$
Total Sources of Funds: $
Uses:
Construction total
Design & engineering
Development fees
Owner’s contingency
Owner’s representative
Miscellaneous
Financing costs
$
Total Uses of Funds: $
The plan of finance is outlined here for informational purposes; however, since OIH is a municipally‐
owned and operated facility, certain rules apply to the financing and operation. The operations and
financing will be funded through two separate funds at the Town level.
In addition, it is expected that the existing OIH site will be sold. These proceeds may be available
for appropriation, subject to certain rules governing the use of such proceeds; however, the plan of
finance does not include the potential land sale proceeds.