Mueller-O'Keefe Case

Executive Summary

Mueller-O'Keefe Memorial Home and Retirement Village is a not-for-profit, faith-based continuing care retirement community faced with the challenge of developing long-range plans. A consultant firm was hired to assist with strategic planning and to recommend ideas for long-term planning, to identify new services, and outline a capital development plan. In addition to these challenges, the consultant faced a reluctance to change by the Board of Directors. Recommendations include establishing a formal mission statement; creating a business plan for the expansion of services and facility upgrades; and developing a financial management plan to promote growth strategies.

Mueller-O'Keefe Memorial Home & Retirement Village

The Mueller-O'Keefe Memorial Home and Retirement Village sits on 90 acres in a small rural community in Ohio (Aaronson, 1995). The land and large brick farmhouse were donated in 1905 by Dr. Robert Mueller to the Evangelical Free Church to be used as a home for aged church members. Over the next 70 years, several additions to the home were made and structures on the property were added. In 1930, two wings were added to the farmhouse to accommodate the increasing requests for admission to the "Old Folks Home" as it was known. Occupancy was almost always at capacity; as soon as a bed became empty it was quickly filled. In the early 1950s, the board identified that the home residents required more nursing care. Residents moving into the home were in poorer health then they had been in the past. Plans were drawn up to build a nursing care wing onto the farmhouse and in the early 1960s; a 100-bed addition was built bringing the total count to 140 beds. Expansion continued with the next phase consisting of retirement cottages.

From 1905 until 1951, the home was open exclusively to the members of the Evangelical Free Church. When financial difficulties struck in 1951, a prominent local industrialist, Mr. Patrick O'Keefe, who happened to be Roman Catholic, established a 25-year endowment for the home. The endowment was intended to ensure financial stability, to fund facility expansion, and to encourage the home to open its admission to non-Free Church members.

Soon after the first cottage was built on the property, retired couples began to apply for parcels where they could build a single-family, ranch-style house. In return for giving the built house to the home, the original cottage residents received life-care contracts. These agreements provided personal care services for the duration on the resident's lives. Due to the unknown financial liability associated with the free care obligation, this program was short-lived. The care costs associated with the resident(s) given life-care contracts had the potential of exceeding the property value. Later in the mid-1960s, life-care contracts were changed to continuing care contracts where care provided by the home was limited to the cottage's construction cost or the it's resale value.

The concept of a retirement village began taking shape in the early 1970s with the addition of eight apartments. Nursing care certified beds rose from 53 to 100 in 1977 and then in 1985, two more certified beds were added. The farmhouse remained the same as it had been in the 1960s with 40 fixed personal care beds. An Alzheimer's unit opened in the 1980s dedicated to providing patient care for patients with Alzheimer's and other related dementias. At the time, the Board of Directors were interested in expanding the dementia care unit however, the home administrator, Mr. Tom Clark, was hesitant to have the home labeled as a mental care facility. Mr. Clark felt that the home's reputation and future admissions would be jeopardized.

Up until then, the home and retirement village had not relied on fancy gimmicks, physical environment or conveniences, but rather on the atmosphere and the reputation for giving excellent basic care to the residents. Minimal marketing was used to attract residents; word of mouth had been relied on as a way of bringing in new residents. Many residents had family members who had been residents themselves.

The year the case study was written, 1995, the home had a fund balance of $5.6 million in the form of: securities worth approximately $3.5 million, $230,000 in a low interest savings account, and net fixed assets of $1.7 million. The growing demand for services along with the available funds fostered the home's Long-Range Planning Committee's plan to develop ways to best meet future needs.

Issues

Conflicts existed amongst the Long-Range Planning Committee and the Board of Directors. For more than 90 years, the home existed without much planning; intuition and improvisation or a "seat of the pants" philosophy had worked well enough. The Board wasn't keen on making plans or incurring any long-term debts, both of which had a significant impact on the future of the home. In addition, no mission statement had ever been adopted in all of the years of running the home. No consensus could be made by the board members as to the basic mission and church relations.

Although these issues existed, the board of directors agreed that it was in the best interest of the home to develop strategies for increasing the services provided by the home. These issues represented significant roadblocks for moving forward. For these reasons, it was determined that a consulting firm could look at the issues from an impartial perspective and present options for growth without interjecting personal feelings. Defined vision and goals would have lessened the need for outside interventions.

This paper will address the two most significant of these issues; 1) the need for creating a business plan to promote growth strategies and financial plans and 2) building new care facilities and renovating existing buildings and space. The need for establishing a business plan now gives direction; it identifies a place to start and goals to accomplish on the way to the finish line. Expanding and upgrading facilities will allow the home to meet the growing needs of the clients and to compete with other retirement facilities.

Magnitude and Significance

A business plan clarifies the purpose and direction of the business; it provides the foundation and timetable for moving forward, it defines the services to be offered, as well as a detailed description of the customers served. Business plans factor in future growth and can be used to effectively plan for changes in the market or changes in direction if necessary as an organization grows. It's