1. Given the capacity planning discussion in the text (see Figure S7.6 ), what approach is being taken by Arnold Palmer Hospital toward matching capacity to demand? 2. What kind of major changes could take place in Arnold Palmer Hospital’s demand forecast that would leave the hospital with an underutilized facility (namely, what are the risks connected with this capacity decision)? 3. Use regression analysis to forecast the point at which Swanson needs to “build-out” the top two floors of the new building,namely, when demand will exceed 16,000 births.
Since opening day, Arnold Palmer Hospital has experienced
an explosive growth in demand for its services. One of only six
hospitals in the U.S. to specialize in health care for women and
children, Arnold Palmer Hospital has cared for over 1,500,000
patients who came to the Orlando facility from all 50 states and
more than 100 other countries. With patient satisfaction scores
in the top 10% of U.S. hospitals surveyed (over 95% of patients
would recommend the hospital to others), one of Arnold Palmer
Hospital’s main focuses is delivery of babies. Originally built with
281 beds and a capacity for 6,500 births per year, the hospital
steadily approached and then passed 10,000 births. Looking at
Table S7.4 , Executive Director Kathy Swanson knew an expansion
was necessary.
With
continuing population growth in its market area serving
18
central Florida counties, Arnold Palmer Hospital was delivering
the equivalent of a kindergarten class of babies every day and
still
not meeting demand. Supported with substantial additional
demographic
analysis, the hospital was ready to move ahead with
a capacity expansion plan and a new 11-story hospital building
across the street from the existing facility.
Thirty-five planning teams were established to study suchissues as (1) specific forecasts, (2) services that would transferto the new facility, (3) services that would remain in the existing
facility, (4) staffing needs, (5) capital equipment, (6) pro formaaccounting data, and (7) regulatory requirements. Ultimately,Arnold Palmer Hospital was ready to move ahead with a budget
of $100 million and a commitment to an additional 150 beds.But given the growth of the central Florida region, Swansondecided to expand the hospital in stages: the top two floors would
be empty interiors (“shell”) to be completed at a later date, and
the fourth-floor operating room could be doubled in size whenneeded. “With the new facility in place, we are now able to handle
up to 16,000 births per year,” says Swanson.
Discussion Questions *
1. Given the capacity planning discussion in the text (see Figure S7.6 ), what approach is being taken by Arnold Palmer
Hospital toward matching capacity to demand?
2. What kind of major changes could take place in Arnold Palmer
Hospital’s demand
an underutilized facility (namely, what are the risks connected
with this capacity decision)?
3. Use regression analysis to forecast the point at which Swanson
needs to “build-out” the top two floors of the new building,namely, when demand will exceed 16,000 births.
* You may wish to view the video that accompanies the case before addressing
these questions.
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