For a long time, drug abuse has been a major cause of death in the United States. According to the Center for Disease Control, 114 people die daily from drug-related complications. Up to 6,748 victims are rushed to the hospital emergency room daily due to drug abuse. In addition, drug overdose claims an average of 44,000 people annually (Thomas, 2020). There is a need for more rehabilitation centers to receive and treat the 90% of individuals who need rehab but do not receive it. The economic initiative that was forwarded to the senior management of Johns Hopkins Hospital is the setting up of a treatment and rehabilitation center within the John Hopkins School of Medicine premise. The facility will target to provide rehabilitation services to drug addicts within the State of Maryland and beyond.
A study was done to determine the feasibility of opening a rehabilitation center within the John Hopkins facility. The school of medicine has been a pioneer in research about the treatment of alcohol, nicotine, opioid, and other substance-related dependencies. The facility will deliver both inpatient and outpatient substance abuse treatment services to ensure an enhanced patient experience. The facility will also follow up on patient progress. The implementation plan entails a 5-year budget for the rehabilitation center, a timeline for the development of the facility, and the outline of the impacts of opening up the facility.
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Budget for the Proposed Substance-abuse Rehabilitation Center
A budget was developed to show the projected revenue and expenses accrued for the next five years. The budget is based on the assumption that the rehabilitation center will become operational by the start of 2021. Therefore, the budget will have revenue and expenditure details for five years between 2021-2025. An internal and external analysis was conducted to explore the opportunities and risks associated with the opening and operation of the rehabilitation center.
The annual revenue for the 5-year analysis period has been calculated based on the expected number of patients and average charges per patient. With about 19.7 million American adults battling drug addiction and only about 14,000 rehabilitation centers nationwide, the facility targets a patient admission of about 250 patients every week (Thomas, 2020). The facility will have 100 inpatients at any given time, which will be the maximum capacity of the facility. The center will also receive 150 outpatients every week. The rehab facility is projected to receive 1000 patients per year. Charges for rehabilitation will vary depending on various factors, including the drug a patient is rehabilitating from, and whether the patient is receiving inpatient or outpatient service. Patients addicted to methadone are expected to be admitted into the facility for an average of 87 weeks, while non-methadone outpatients will go through an 18-week program (French et al., 2008). The average weekly charge per patient is $200. Therefore, the revenue collected during the first year of operation is $10,400,000. Revenues from rehabilitation services are expected to increase by 4.6% per annum (Thomas, 2020). The cost of running the rehabilitation center will include staff salaries, administrative costs, and basic utilities.
The staff salaries will be according to the Department of Labor and Statistics (2017). The facility will require two physicians ($464,000 per annum), two physician assistants ($ 292,520 per annum), ten nurses (573,400 per annum), and four medical assistants ($ 140,000 per annum), and four licensed practical nurses ($ 180,120 per annum) (U.S. Bureau of Labor and Statistics, 2017). No new employees will be recruited within the 5-year period. Additional expenses other than wage bill expenses are assumed to be 10% of the revenue collected per year.
The cost of building the big hospital-like facility is projected to be $ 8.75 million (Broome et al., 2012). While the John Hopkins Hospital will contribute one-quarter of the capital cost through the John Hopkins Hospital reserves, the remaining capital will be funded by a bank loan. Thus, the organization will contribute $ 2.19 million to the construction of the facility. The remaining $ 6.75 million will be funded by a loan that will be serviced for the next 5 years at an interest rate of 10% per year. The cost of loan repayment per year is expected to be $ 2.1 million.
According to the budget analysis, the rehabilitation center will receive a cash surplus before the end of five years. The net annual return is expected to increase consistently due to the increased annual revenue while the expenditure on loan and salary remains constant. The cumulative cash surplus by the end of year five is estimated at $ 23,858,054.83.
Rolling out the Economic Initiative
John Hopkins Hospital must first develop a timeline to lay out the various milestones that must be completed before the rehabilitation facility can be open to the public. Although the current hospital occupies 20 of the 60 buildings available in the Medical school facility, there will be a need to construct a new building that is isolated from the rest of the structures. It will take 2 months before the senior management at John Hopkins can approve the project. The bank would have also approved the loan funds within two months. With sufficient labor supply, the construction of the buildings for the facility is expected to last 9 months. Thus, the construction is scheduled to start in March 2020 and end by October 2020. The facility is expected to be fully operational by the start of 2021.
Once the project timeline is in place, it is important to inform every stakeholder about the new economic opportunity. The opinions of these individuals are vital to the successful implementation of the new substance abuse rehabilitation center. The senior leaders of the hospital must liaise with other internal stakeholders within the facility as well as external stakeholders to gain intel about the most effective way to optimize the performance of the rehabilitation center once it becomes operational. Periodic meetings attended by the senior management, the internal stakeholders, and external stakeholders will be conducted to analyze the progress of the center and come up with changes to better the quality of the final facility. These meetings will be conducted on a weekly basis.
In the next step, the rehabilitation center must be tested to ensure that it is complying with the necessary standard of values. John Hopkins facility has a long tradition of medical research. The organization has conducted previous studies on the treatment of alcohol, nicotine, and other substance abuse. Therefore, the facility will strive to adopt a research-based treatment process. In addition, the treatment center will adopt a patient-centered culture to ensure that every patient enjoys their experience in the facility. Even after these patients leave the facility, the rehabilitation center will follow up to investigate the outcome and as well as strengthen and teaching research in addition.
With a patient-based model of operation, patients are the primary external stakeholder who is vital to the successful operation of the facility. Therefore, these groups of individuals must be treated in an ethical and culturally sensitive manner. Although these individuals might not be in their right state of mind, their human rights and dignity must be respected at all times. Also, patients will only be treated after they have offered informed consent. The rehabilitation center will also extend an option to withdraw to any patient who wishes to terminate his or her participation in the rehabilitation center (UNODC, 2016). Compliance with these standards will ensure that all the requirements by the regulatory body have been met. Besides, respect for patients’ dignity will develop a good reputation for the organization.
To successfully ensure that the operation of the rehabilitation center is conducted in an ethical and culturally sensitive manner, the facility will employ the international treatment standards for substance abuse, which ensure that substance abuse patients are treated with the same level of respect as any other patient suffering from chronic diseases. The staff members must, at all times, provide treatment without being disrespectful and using non-stigmatizing and non-discriminatory attitudes towards the facility’s patients. The operation of the facility in an ethical manner will improve patient experience and medical results.
The Effects of the Rehabilitation Center on other Services and Care
Other than the economic benefits, the rehabilitation center within the John Hopkins School of Medicine will facilitate improved data collection to facilitate the research on the treatment of substance abuse within the facility. The data collected from the inpatient and outpatient electronic medical records can be used to explore the best medical practices to treat addiction.
The rehabilitation center might also have serious economic consequences to the medical center in the event that it does not attract the projected number of patients. The organization might find itself dealing with operating losses if the anticipated annual revenue is not achieved. The organization might be forced to service the $ 2.1 million loan repayment using funds from other accounts. Besides, in the incidence that the senior management of the hospital does not approve the project in time, or if the approval of the bank loan is delayed, the milestones in the project timeline might not be achieved within the predicted time.
Strategies to Deal with the Dynamic Environmental Forces
One of the primary environmental forces that might impact the success of the rehabilitation center is the number of local rehabilitation centers within the region. In the state of Maryland, there are more than 400 rehabs. Therefore, most of the patients requiring the services of a rehabilitation center might already have a facility next to his or her place, which makes it even more convenient. Nonetheless, the facility can easily overcome stiff competition within the next few years.
Some of the factors that affect how people select their preferred rehabilitation center include accessibility, the cost of admission, and the quality of services (French et al., 2008). John Hopkins Hospital has managed to develop a positive reputation in the United States. Therefore, the rehabilitation center has the ability to take advantage of the already good name to penetrate the current market. Exceptional patient experience will also help to promote the facility through recommendations. Aside from the good name, the rehabilitation center can also employ pricing and marketing skills to help beat the stiff competition in the State. The combination of the detox services from the hospital, and the intense therapy from the center makes it convenient since patients get to complete the rehabilitation process within a single facility.
Conclusion
From the budget analysis, the rehabilitation center will be a feasible economic opportunity for John Hopkins Hospital. However, for the facility to be successfully developed and operated, there must be cooperation between the various stakeholders involved in the market. Although the organization might be required to take a loan to successfully complete the construction of the rehabilitation center, the facility will have a cash surplus in less than five years. The rehabilitation center will be beneficial to the Medical center through the potential financial benefits and the contributions to the existing research on alcohol and drug abuse through data.
References
Broome, K. M., Knight, D. K., Joe, G. W., & Flynn, P. M. (2012). Treatment program operations and costs. Journal of substance abuse treatment , 42 (2), 125-133.
French, M. T., Popovici, I., & Tapsell, L. (2008). The economic costs of substance abuse treatment: Updated estimates and cost bands for program assessment and reimbursement. Journal of substance abuse treatment , 35 (4), 462-469.
Thomas, S. (2020). Addiction Statistics | Drug & Substance Abuse Statistics. Retrieved 16 January 2020, from https://americanaddictioncenters.org/rehab-guide/addiction-statistics
UNODC, W. (2016). International Standards for the Treatment of Drug Use Disorders.
U.S. Bureau of Labor and Statistics (2017). Occupational Employment Statistics.Retrieved
from: https://www.bls.gov/oes/current/oes_nat.htm
