BUSINESS PLAN

PRESENTED BY: ELAINE DEAN RN BSN CDN

“TO CARE FOR HIM WHO SHALL HAVE BORNE THE BATTLE AND
FOR HIS WIDOW, AND HIS ORPHAN”.
A. LINCOLN
TABLE OF CONTENT
Executive Summary

Problem or Need Identified

Product Definition

Market Analysis

Budget Estimates

Additional Financial Analysis

Timeline

Conclusion
EXECUTIVE SUMMARY

• Organizational mission: “Honor American’s veterans by providing exceptional healthcare that improves their
lives and well-being”.
• Problem: The increased number of veterans newly diagnosed with renal insufficiency, the increased number of
veteran with progressive chronic kidney disease (CKD) to end-stage renal disease (ESRD), and the large
number of veterans outsourced to non-VA dialysis centers.
• Market : Over nine million vets are enrolled in VA care. More than 52,000 transition to ESRD between 2007-
2011 alone (Starzi, 2013). Dialysis is the treatment of choice for approximately 90% of all veterans with ESRD.
• Solution: Expansion of the current nephrology program to facilitate the increased number of veterans requiring
life-sustaining ESRD care. Implement strategic plan and methodologies to decrease the high incidence of
admission and readmission rates. Improve service access of hemodialysis in the VA system, reduce cost, and
improve patient outcome.
PRODUCT AND NEED IDENTIFICATION

• Each year approximately 13,000 veterans transition to kidney replacement therapy (most
dialysis) = 11-12% of all incident dialysis patient in nation
• Based on recent data, ESRD is 34% likely to occur among veterans than the general
population (USRD, 2015).
• Decrease the cost of outsourcing dialysis care.
• Improve integrated access to care (managing primary cause of CKD and other comorbid)
• Decrease the rate of dialysis related admissions and readmissions.
• Improve the health and well-being of the veteran through a multidisciplinary veteran-centered
approach.
PRODUCT DEFINITION

Kidney disease can affect your body's ability to clean your

blood. When your kidneys are damaged, waste products
and fluid can build up in your body. Symptoms include
ankle swelling, vomiting, weakness, poor sleep and
shortness of breath. Kidney disease is life-threatening.
VASCULAR ACCESSES FOR DIALYSIS

AV-fistula is a surgically created connection between an

artery and a vein.
AV-graft is a strong artificial tube inserted underneath the
skin to connect the artery and the vein when the
patient’s own vasculature does not permit a fistula.
HEMODIALYSIS

The best treatment modality for ESRD is transplantation requiring a

donor match and the only other alternative to transplantation is
dialysis. Hemodialysis involves pumping the patients blood through an
external filtration circuit then returning clean blood to the body. The
artificial kidney or hemodialyzer removes the waste and extra
chemicals form the body. Treatments usually last 3-5 hours three
times a week.
MARKET ANALYSIS

STATISTICAL DATA: SOURCE US RENAL DATA SYSTEMS

• 22 million veterans enrolled in VA care.

• Fiscal year 2007- fiscal year 2011 52,172 veterans transitioned to ESRD.
• The incidence of CKD is 34% higher among veterans 600,000 versus 187 per 100,000 compared to the general
population.
• USRD reports an annual increase of 5% in the diagnosis of ESRD
• A comparison of two VA regions found 27% of veterans were dialyzed in the VA system 47% were outsourced
and 25% received dual care.
• The cost to outsource dialysis grew 348% between (1993-2003)
• The increase in Americans receiving dialysis grew 47 fold in four decades
• Data in 2013 showed 468,000 Americans received dialysis care.
 Dialysis DaVita FMC VA

Revenue $828 million 1 Billion Federally funded not for profit

MARKET ANALYSIS
(Profit 2015)

Competitor Analysis (2015 Revenue) Employee 1 per 16 pt 1 per 12 pt 1 per 5 pt

The two leading for-profit providers of

dialysis services are German-based Price $250 + 20% copyt + cost of $250 + 20% copayment + cost of No cost to veterans
medication medication
Fresenius Medical Care (FMC) and Maybe monthly $12
Medication copay
Colorado-based DaVita Healthcare
together these two companies account Quality Average Average High

for 70% of the dialysis market.

(Shinkman, 2016).
MARKET ANALYSIS

DIALYSIS TREATMENT COST AND INFLATION

• Ultimately, the renal market is driven by the continuously increased prevalence of kidney disease and the
high cost of treatment. These costs also adjust with inflation.
• The complications attributed to the disease also contributes to the push in the market.
• Hemodialysis cost an average of $89,000 per year per patient (varies in different markets). The average
cost to treatment to private insures is approximately $618
• Medicare pays 80% of their contracted rate for dialysis treatments ($ amount differs in different parts of
the country). The patient is responsible for 20% unless is is picked up by Medicaid.
• Medication cost related to ESRD cost patients an average of $110 per month
• An emergency room visit with treatment can average $10,000
• Hospital admission averaging 7-10 days averages approximately $25,000 for dialysis patients.
MARKET ANALYSIS

LABOR COST

RECOMMENDED STAFFING BPVAMC STAFFING

• Labor cost is a large portion of the operating cost for any • Allied personnel budgeted under respective service
dialysis unit.
• No additional RNs needed. Current ratio 1:5
• Registered Nurse (RNs)
• Expansion will increase ratio 1:7
• 1 RN to 12 patients
• PCT current 1:4
• Patient care Technicians (PCTs)
• Seven additional PCT needed
• 1 PCT to 4 patients
• Average Salary $32,000-$40,500 per year with benefits.
• Cost to program for salary at the top tier $283,500
 Position Standard FTE Shifts 2 FTE Shifts 3
Medical Instrument 1 technician per 4 patients 5.00 7.50
Technician (Hemodialysis) per shift
Staff Nurse (RN-Nurse II 1 RN per 12 patients per shift. 3.00 3.00
Minimum of 3 FTE
Nurse Manager (Nurse III) 1 FTE 1.00 1.00
MD- Nephrologist (Medical 11 hours/patient/year. 0.25 0.38
Director) Minimum of 0.25 FTE.
Maximum of 1.0 FTE

MD- Nephrologist (Staff 0.5 hours( 30 minutes) per 0.14 0.21

Physician) patient per month

MARKET ANALYSIS Mid-level provider (nurse

practitioner/physician
0.2 hours (12 minutes) per
patient per week
0.24 0.36

assistant)

Dialysis Center Staffing Model Social Worker 1 per 100 patients 0.50 0.80
Dietitian 0.45 hours (27 minutes) per 0.25 0.37
The Department of Public Health visit. 2 visits/month.
Minimum of 0.25 FTE
(DPH) regulations dictates that a Supply Technician 0.25 FTE 0.25 0.25
dialysis unit an administrator, medical Biomedical Equipment 0.1 FTE 0.10 0.10
Support Specialist
director, medical staff, nurse manager, Medical Support Assistant 1 FTE 1.00 1.00
nursing staff and additional personnel. (Clerk)
Pharmacy Technician 0.125 hours (7.5 minutes) per 0.15 0.23
Diagram: shows projected staffing needs patient per week
Total 11.88 15.19
 Comparative
treatment Cost

Max patients (2 Max

Shifts) 48 patients (3
Shifts)
72
2 Shifts 3 Shifts
Make Scenarios Annual Per Treatment Annual Per
Treatment
VAMC $2,065,209 $276 #2,575,307 $229
Expansion
2 Shifts 3 Shifts
Outsourced Annual Per Treatment Annual Per
Treatment
MARKET ANALYSIS Medicare $2,211,430 $295 $3,317,145 $295
Contract $2,529,878 $338 $3,794,816 $338
(Facility
Specific)
Comparative treatment cost Contract $2,697,701 $360 $2,046,551 $360
between Bay Pines VA medical (National
Average)
Center (VAMC), Medicare, contract
Cost Savings Annual Per Treatment Annual Per
facilities and the national average. Treatment
Medicare $146,221 $20 $741,838 $66
Contract $464,669 $62 $1,219,510 $109
(Facility
Specific)
Contract $632,492 $84 $1,471,245 $131
(National
Average)
 Site Selected BPVAMC

Planned Dialysis Stations 12

Planned Occupancy 100.00%
Default Assumptions
Maximum Annual # Treatments Per Patient 156.00

Beneficiary Travel Reimbursement Per Mile 0.42

Nominal Interest Rate 3.00%

Overhead Factor 12.00%

Lease Construction Cost Amortization Period 10.00

Equipment Cost Amortization Period (years) 5.00

Renovation Construction Cost Amortization 40.00

Period (years)

BUDGET DETAILS
Civilian Position Full Fringe Benefit Cost 36.25%
Factor
Non-Pay Inflation Rate 2.00%
Lease Escalation Factor 4.00%
Real Discount Rate 0.90%
Default Assumptions, Nominal % of Annual Savings Realized (Year 2-9) 90.00%

Interest Rate and Standardized Values % of Annual Savings Realized (Year 1) 75.00%

Standardized Values
Total SF 7,402.50
Supply Cost Per Treatment $30.87
Pharmacy Cost Per Treatment $17.11
Laboratory Cost Per Treatment 7.52

Total Medicare Dialysis Payment $256.35

Contract (National Average) Payment $321.29

Nephrology Oversight Treatment Cost 21.67

National Overhead Cost 2.31

Local Overhead Cost $13.04
 Calculations
Average Beneficiary Travel $1.96
Cost per Treatment
Total Medicare Cost per $295.33
Treatment
Total Contract (Facility- $337.86
Specific) Cost per Treatment
Total Contract (National $360.27
Average) Cost Per Treatment
2 Patient Shifts Per Day
BUDGET DETAILS # Patient Shifts per Day 2
# Patient Shifts per Week 4
Maximum Patient Capacity 48
Calculations (any point in time)
Maximum Annual # 7,488
Treatments
3 Patient Shifts Per Day
# Patient Shifts Per Day 3
# Patient Shifts per Week 6
Maximum Patient Capacity 72
(any point in time)
Maximum Annual # 11,232
Treatments
 Annual Recurring Costs
BPVAMC Dialysis BPVAMC Expansion
Patient Shifts per day 2 shifts 3 shifts
Lease $0 $0
Operating $157,747 $157,747
Service Contracts $5,759 $6,495
Personnel $1,022,010 $1,284,715
Supplies $231,155 $346,732
BUDGET DETAILS Pharmaceuticals #128,120 $192,180
Laboratory $56,310 $84,465

Detail Budget: Annual Recurring Cost Preventative Maintenance $68,480 $68,480

Beneficiary Travel $14,679 $22,019
Overhead $122,641 $154,166
Total Recurring Cost $1,806,900 $2,316,998

Comparison Cost
Max patients (2 Shifts) 48 Max patients (3 Shifts) 72
Make Scenarios 2 Shifts 3 Shifts
Annual
FINANCIAL ANALYSIS

Break Even (% Capacity) Internal Rate of Return

Shift 2 Shift 3 Shift 2 Shift 3

FINANCIAL ANALYSIS

Payback Period (Years) Net Present Value (NPV)

7

0 $0 $1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000
Shift 2 Shift 3 Column1 Column1 Shift 3 Shift 2
TIMELINE

Year 1
Q1 Q2 Q3 Q4

Design expansion plan Submit budget Request leadership Hire and train the new
with direct input from proposal for the approval for third shift staff.
all services involved project expansion

Submit business plan Secure funding for the

for expansion of the expansion
renal program
TIMELINE

Year 2
Q1 Q2 Q3 Q4

Have mock third shift Modify or refine Monitor patient

roll out using necessary process to outcome, reduce Perform dialysis
impatient end stage correct deficiencies impatient admission, specific patient
renal disease patients reduce cost and other satisfaction survey
Initiate third shift indicators to
dialysis demonstrate Report to agency
expansion success to
stakeholders
STAFF DEVELOPMENT

• Health care professional education and training

• Organization provides tools, resources, and training
• Employees have opportunity for personal development
• Empower employees in understanding health care financing and sustainability
• Ability for integration into clinical practice
• Develop the necessary skills to actively manage resources.
• Active participation in high quality cost efficient care
CONCLUSION AND FEASIBILITY STATEMENT

• This business plan is in compliance with the T21 plan advocated by the Secretary of the
Department of Veterans affaire which is aimed t expanding services, creating veteran-
centered delivery model and anticipated complex care with an emphasis on coordinated care
(Watnick & Crowley, 2013).
• The goal of the program is to reduce the number of purchased dialysis care in the private
sector by moving as many veterans as possible into the VA system.
• Collaborate effectively with the community outpatient clinics in the management of
complications and comorbid of dialysis example infections and anemia thereby decreasing
avoidable hospitalizations and ultimately promote efficient use of resources.
• Improve efficiency and effectiveness of available resources and ultimately cost containment.
FEASIBILITY STATEMENT

• The project will undergo annual review and possible further large scale expansion to
accommodate the continued increase in service needs
• VA auditors will do an initial then annual feasibility studies to show the expected
profitability of the expansion program.
REFERENCES

Flythe, J. E., Katsanos, S. L., Kshirsagar, A.V., Falk, R. J., & Mooore, C. R. (2016). Predictors of 30-day hospital readmission among
maintenance hemodialysis patients: A hospital perspective. American Society of Nephrology.
KDOQI (2015). KDOQI clinical practice guideline for hemodialysis. Retrieved from https://www.kidney.org
Shinkman, R. (2016). The big business of dialysis care. Retrieved from https://catalystst.nejm.org/the-big-business-of-dialysis-care.
Starzi, T. (2013).VA research on kidney disease. Retrieved from https://www.research.va.gov/topics/kidney_disease.cfm
USRDS (2015). CKD in the United States. Retrieved from https://www.usrd.org/2016/view/v1_08.aspx
Wang,V., Maciejewski, M. L., Patel, U. D., Stechuchak, K. M., Hynes, D. M., & Weinberger, M. (2013). Comparison of outcomes for
veterans receiving dialysis care from VA and non-VA providers. BMC Health Services Research, 13(26).
Watnick, S., & Crowley, S. T. (2014). ESRD care within the US department of vetarns affairs: A forward-looking program with an
illuminating past. American journal of Kidney Disease, 63(3), 521-529