VNS Relocation Project

A multi-dimensional cost-benefit analysis

Background• Visiting Nurse Service (VNS) is Rochester, New

York’s first homecare agency providing insurance-covered and private pay services, meal delivery, hospice & palliative care.

• Originally founded in 1919 as the Public Health Nursing Association, VNS announced an affiliation agreement with the University of Rochester's Strong Health in 1997 and converted to a not-for-profit status.

• To Improve operation efficiency and serve the Rochester community better, VNS is looking for relocation solutions.

Two Current Locations 2180 Empire Blvd. Webster. (Own, 42,000 Square

feet.) 65 College Ave. Rochester. (Lease, 5,300 Square

feet)

Financial Impact of Property Cost Differential

NPV/ Annual Cash Flow NPV Year 1 Year 2 Year 3 Year 4 Year 5

Lease & Mortgage 16,878,436 (55,060) 374,562.00 364,525 354,696 345,076

Lease & Up Front Cash Payment 13,036,904 (2,060,244) 496,554 481,243 466,379 451,952

Sale & Mortgage 542,571 842,535 (80,513) (75,176) (70,155) (65,433)

Sale & Up Front Cash Payment 367,582 (1,152,780) 49,709 48,257 46,843 45,466

Lease & Rent (372,598.) (24,309) (10,825) (10,663) (10,496) (10,325)

Sale & Rent (12,540,010) 895,216 (444,989) (430,424) (416,331) (402,696)

Where are VNS Employees?

15-minute Driving Circle

30-minute Driving Circle

2180 Empire Blvd

65 College Ave.

100 Carlson Rd

Other EmployeesEmployees travelling to Empire Blvd every day

Where are VNS Employees?

2180 Empire Blvd

65 College Ave.

100 Carlson Rd

Employees travelling to Empire Blvd every dayOther Employees

30-minute Driving Circle

15-minute Driving Circle

Employees’ Annual Commute DistanceComparison: Current Location vs New Location (New Location Example: 100 Carlson Blvd, Rochester 14610)

Employees’ Travel Distance DistributionStandard Deviation going to Empire Blvd: 8.0Standard Deviation going to Carlson Building: 12.5

Employees’ Travel Distance Distribution

Standard Deviation going to College Avenue: 6.5Standard Deviation going to Carlson Building: 6.7

Where are VNS Clients?5 mi

1 100 1k 2k 3k 4k 5k 6k

Effects of Employee Turnover Rate

Registered Nurses: 80Training Cost per Nurse: $54,000Home Health Care Provider: 210Training Cost per Provider: $5,000

Turnover

18% 17% 16% 15% 14% 13%

RN Saving $- $43,200 $86,400 $129,600 $172,800 $216,000 HHC

Saving $- $10,500 $21,000 $31,500 $42,000 $52,500 Total

Savings $- $53,700 $107,400 $161,100 $214,800 $268,500

Potential Ways to Reduce Turnover

Create Day Care program. Minimize cost through “Day Care Dollars”

Pre-k school. Tap funding for inner-city pre-K programs 

Subsidized cafeteria, including funding for children’s programs 

A single location could more easily support a "pipeline" for Home Care Workers to become RN's or other administrative roles. "Progress with VNS”

Consolidated location encourages organization-wide meetings.  Promotes a cohesive and friendly/social working environment 

Increases interactions between the community and VNS, including making services more available at a larger location

Encourages integration with other parts of the city and URMC programs, such as Community Health and Wellness

Advantages of MovingIncrease operational efficienciesLower turnover rate thereby reduce costsIncrease services & integration with community

Disadvantages of MovingPotentially upfront costs for new facilities

Identifying a site/building with enough parking (approx 250) could be challenging.

ObservationsFrom a longer-term perspective, the direct cost of

the move and impact on annual financials is substantial, but not the only determinent.

Reducing turnover rates, increasing operational efficiencies and identifying cost savings will have a substantial impact on the long-term financial health of VNS

Next Steps Further assess potential lease and sale properties.

Conduct emplyee surveys to determine: Pros and cons of move Daily “pain points” for employees Develop programs and move could alleviate “pain points” to

decrease turnover rates. Evaluate financial implication for sub-dividing Empire Building

Assess operational efficiencies and cost savings, both from a consolidation perspective and general.

Evaluate transportation optimization programs to reduce costs and increase efficiencies

Thank you.

QUESTIONS?

AppendixFinancial Assumptions

Leasing price of Empire : $10-$15/sq-ft (annual) (Take mid point: $12.5/square )

Selling price of Empire: $35-$45/sq-ft, (annual) (Take mid point: $40/square)

The annual utility expense is $72,500. It includes electric, gas, sewer water, generator fuel and other services.

Rental for new building： $12-$13/sqr-ft (annual)

One-time payment for new building: $41-$62/sqr-ft (Take mid point: $50) total : 50*45,000=$3,350,000

IT expense reduction: 10% of $1,156,884=$115,688 Renovation cost for the new purchased property is $10/square foot There will be no additional renovation cost for renting.             

Appendix Mortgage assumption: 30 years    

20k tax incurred when leasing out the Empire building to non-profit entity

8% tax rate for the sale of Empire property

Commission fee to agency  is 6% of the sales/rent income 

Interest rate: 5%

Cost of Capital: 5.5%

AppendixAssumption for employee travel distance: Office employees travel to office every day

Field employees travel to office once a week

Employees’ Daily Commute Distance: