FINAL_Catholic_Health_Initiatives_Food_and_Nutrition_Commercialization_Recommendation

CATHOLIC HEALTH
INITIATIVES
This project is to design and develop a standalone Food and Nutrition Support
Services Program within the Supply Chain department that can then be
marketed and sold to other healthcare systems. By developing this standalone
business services support Program, Supply Chain can then use this model to
create other standalone Programs that will eventually allow it to market a full
Supply Chain offering to healthcare organizations.
Evaluation of Food
and Nutrition
Commercialization
Program
JKT2 – MBA Final Project
Prepared by: Cheryl J. Clark
Student ID: 417037
October 27, 2014
Mentor: Deidre Von Elkerson

EVAL OF F&N COMMERCIALIZATION 1
Table of Contents
1. Organization Background and Current Status.............................................................. 3
2. Food and Nutrition Commercialization Program Summary........................................ 5
3. Program Background and Analysis ................................................................................ 7
CHI Food and Nutrition Program-Operations................................................................... 7
Program Staffing ................................................................................................................... 7
Program Development and Design .................................................................................... 12
Reporting and Dashboards................................................................................................. 16
CHI Food and Nutrition Program-Marketing ................................................................. 17
Customer Base ..................................................................................................................... 17
Marketing Plan.................................................................................................................... 19
CHI Food and Nutrition Program-Finance ...................................................................... 21
Staff Requirements.............................................................................................................. 21
Capital Expenditures .......................................................................................................... 22
4. Recommendations........................................................................................................... 24
CHI Food and Nutrition Program-Operations................................................................. 24
Program Staffing ................................................................................................................. 24
Program Development and Design .................................................................................... 27
Reporting and Dashboards................................................................................................. 28
CHI Food and Nutrition Program-Marketing ................................................................. 29
Customer Base ..................................................................................................................... 30
Marketing Plan.................................................................................................................... 31
CHI Food and Nutrition Program-Finance ...................................................................... 33
Staff Requirements.............................................................................................................. 33
Capital Expenditure ............................................................................................................ 34
Recommendations Summary.............................................................................................. 36
Operations............................................................................................................................ 36
Finance.................................................................................................................................. 39
5. Program Implementation Plan...................................................................................... 42
Operations............................................................................................................................ 42

Marketing............................................................................................................................. 46
Finance.................................................................................................................................. 49
6. Program Implementation Timeline............................................................................... 53
7. Commercialized Program Impact to CHI.................................................................... 54
8. Conclusion ....................................................................................................................... 56
9. References........................................................................................................................ 58

Organization Background and Current Status
Catholic Health Initiatives (CHI), a nonprofit, faith-based health system formed in 1996
through the consolidation of four Catholic health systems, expresses its mission each day by
creating and nurturing healthy communities
in the hundreds of sites across the nation
where it provides care. One of the nation’s
largest health systems, Englewood, Colo.-
based CHI operates in 18 states and
comprises 96 hospitals, including four
academic health centers and teaching
hospitals and 26 critical-access facilities; community health-services organizations; accredited
nursing colleges; home-health agencies; and other facilities that span the inpatient and outpatient
continuum of care. In fiscal year 2014, CHI provided $910 million in charity care and
community benefit -- a nearly 20% increase over the previous year -- for Programs and services
for the poor, free clinics, education and research. Charity care and community benefit reached
more than $1.7 billion with the inclusion of the unpaid costs of Medicare. The health system,
which generated revenues of almost $13.9 billion in FY14, has total assets of $21.8 billion.
“Together, as a values-driven work community we can fulfill our mission to bring new life,
energy and viability to our health care ministry today and into the future.”
With the implementation of the new healthcare reform law in America, the Patient
Protection and Affordable Care Act (PPACA) 2010 HR3590, or Affordable Care Act (ACA) for
short, the configuration of healthcare is changing especially as it relates to reimbursements. The
goal has now become keeping the patient population served from entering the hospital and

providing for their health needs in preventative and disease management methods. With the new
method of healthcare coverage established by the ACA, health systems like CHI will be paid a
specific dollar amount for each person they serve in the defined population. CHI will be able to
increase the bottom-line revenues by keeping their patient populations healthy and out of the
hospital. Because this is new and untested and there is no way of knowing if revenues will be
generated, CHI is asking that all business areas determine methods or Programs to increase
revenues for the organization.
Healthcare organization
executives are asking their staffs to
do more with less while continuing to
meet the quality, safety, outcomes
and patient satisfactions necessary to
remain competitive. “The resources
needed to meet these higher expectations are shrinking. People are being asked to do more with
less. The healthcare workplace, never a place for sissies under the best of circumstances, has
become a chronically stressed environment” (Goozner, 2013).

Food and Nutrition Commercialization Program Summary
With the passage and graduated implementation of the ACA, CHI has been working since
2010 to develop programs and service lines that will reduce expenses to improve operating
incomes. Supply Chain has been instrumental in several programs and expense reduction efforts
during this time. For example, a National Office Supplies Program has been developed that is
managed at the national level as well as a Food and Nutrition Program that is currently under
development and system-wide implementation. Business Support Service Lines for
Orthopedics, Cardio Rhythm Management, Spine and Oncology have been developed and are
managing expense by working with the vendor and physicians
to create the optimal solution for patients and the organization.
In addition, CHI Supply Chain has developed and implemented
a commercialized Clinical Engineering support service that has
been sold to several outside health systems. This Clinical
Engineering support service has been classified as world class
by two large health care consulting firms.
With the unbridled environment now occurring, healthcare organizations are becoming
more flexible and moving to outsource those particular services that are not within the core
competencies of the their healthcare system in order to provide the quality they require and the
savings needed to remain competitive. Leadership’s focus will be on clinical patient quality
instead of back door types of services.
This project is to design and develop a standalone Food and Nutrition Support Services
Program within the Supply Chain department that can then be marketed and sold to other
healthcare systems. By developing this standalone business services support Program, Supply

Chain can then use this model to create other standalone
programs that will eventually allow it to market a full
Supply Chain offering to healthcare organizations.
This Program will benefit other systems because it
will allow them to implement processes, procedures and
savings that will improve their operating margins quickly
as well as improving the health of the people and communities they serve. Along with this will
be the financial benefit to CHI Supply Chain permitting them to contribute to the raising of the
additional revenues required for continued solid operations at CHI (Kutscher, 2014).
This project development recommendation will focus on several functional departments
within CHI: Operations, Marketing and Finance.
Disclaimer
The information and analysis contained in this document is the proprietary and exclusive
property of Catholic Health Initiatives and is solely based on the current economic and health
care environment. The risks associated with this analysis are solely owned by Catholic Health
Initiatives. No part of this document, in whole or in part, may be reproduced or used for design
purposes without the prior written permission of Cheryl Clark.
The information in this document is provided for informational purposes only.

Program Background and Analysis
CHI Food and Nutrition Program-Operations
With the reduction in expenses being implemented across the organization, the client is
concerned with having the appropriate amount of staff and time to complete this Program for
commercialization. There are also concerns that the current staff workloads are at a maximum
and the amount of time required to manage this project will impede its progress.
Program Staffing
The client would like to utilize the staff already in place to the degree it is possible and
limit the number of new staff required to manage a successful Program. By successfully
integrating this Program into the current work, the client hopes to reduce the amount of Program
operating expense, increase profits and to ultimately increase the overall revenues for the
organization. The client is also interested in knowing what the ROI will be on the investments
made to operate the Program.
General Considerations
-CHI food and cafeteria spend in FY14 for all facilities was = $26,897,388
-CHI savings generated from this Program in FY14 were = $3,394,300 with a net savings margin
of .13%. Currently 12 out of 96 facilities are utilized the Program for all of FY14.
-CHI currently is partnered with a world-wide food service Program.
-CHI currently has three full time dedicated staff to the F&N Program and one 30 hour staff
person.
-Vice President – 40 hours per week; 52 weeks per year with four weeks paid time off.
-Finance Manager – 40 hours per week; 52 weeks per year four weeks paid time off.

-Sr. HR Manager – 40 hours per week; 52 weeks per year four weeks paid time off.
-CHI Supply Chain has one part-time staff (Director) dedicated to the implementation
and management of the F&N Program. – 30 hours per week; 52 weeks per year four weeks paid
time off.
- Average hourly compensation (wages, bonuses and benefits) = $65.71/hour.
-Average savings produced per average hour in FY14 = $353.12.
-Savings per facility FY14 = $282,858 (12 facilities – one market)
-Projected worst-case scenario average hourly savings produced with full implementation =
$1,026/hr. at $8M projected savings.
Projected best-case scenario average hourly savings produced with full implementation =
$1,923/hr. at $15M projected savings.
-Minimum percentage increase in implementations required to meet best-case average hourly
savings = 77% or 41 facilities for a total of 53 facilities in three markets.
-Minimum percentage increase in staffing required to meet best-case scenario = 75% (additional
three market Food Managers).
Title Base Wage Bonus 9%
Healthcare
10%
Retirement
6%
Total
Compensation Wages/Hr Hours/Yr
VP 150,000$      13,500$     15,000$        9,000$           187,500$            90$               2,080
Director ‐ 30 hrs 110,000$      9,900$        11,000$        6,600$           137,500$            66$               1,560
Finance Manager 80,000$         7,200$        8,000$           4,800$           100,000$            48$               2,080
HR Manager 70,000$         6,300$        7,000$           4,200$           87,500$               42$               2,080
Total 410,000$      36,900$     41,000$        24,600$        512,500$            246$            7,800
Ave/Hr
Compensation
65.71$

Current Program and Implementation Progress
Because CHI is partnered with a world renowned food service organization, the
employment pool is very experienced and knowledgeable in this field. The current F&N
Program employs a Vice President from this food service organization that is also a registered
dietician and expert in her field. In addition, the Analyst currently on staff comes from this same
partner organization so he is well versed in the specifics of food service analytics. The CHI
Supply Chain Director has been with the organization many years and has a very strong
background in implementation and contract sourcing.
The implementation of the F&N Program within the CHI System has been convoluted
and difficult to “sell” to the various divisions. Significant efforts have been made to educate and
supply the supporting financials to show the continued benefit of implementing the Program.
Because the Program takes time to recognize the savings (significant investment in the first
stages of the Program), CHI continues to meet road blocks and implementation delays.
Questions and Analysis
Who will manage this new Program?
Since this commercialization of the Program is new and is a separate initiative from the
Food and Nutrition implementation at CHI facilities, there will need to be an increase in staffing
to market and sell the Program. As the Program grows and more agreements are made, there
may be a need to hire additional Managers of Operations.

What would an org chart look like for this new Program?
Executive Assistant
Vice President
Food and Nutrition
Business Line
Director
Food and Nutrition
Business Line
Manager Operations
Food and Nutrition
Business Line
Senior
Vice President
Business Lines
What space requirements are needed for new staff?
Because this is a new Program that will require a few additional staff, the space
requirements will be in the National Office. The Vice President, Director and Manager will all
be new positions that will require seating. The Vice President and Director will have offices and
the Manager a cube since they will likely be traveling a great deal.
What equipment and furniture requirements are needed for new staff?
The new staff will all need computers, phones and furniture for their offices and cube if
none is available.
The equipment and new employee staffing costs would be approximately =
$6000/person.

What will the new staff cost?
- Average hourly compensation (wages, bonuses and benefits) = $68.11/hour.
- Three new staff would cost approximately $500,000/year in wages, bonuses and benefits.
What added operations expenses will be associated with new staff?
Operational expense will include salaries, benefits and all travel associated with the
Program. Significant travel will be required to market the Program and then to implement the
installation once an agreement has been executed.
Marketing and Sales Travel per location = $10,000
Assessment Travel per location = $8,000
Implementation Travel per location = $10,000
Average Travel per location per each executive (3) = $9,334
Healthcare
10%
Retirement
6%
Total
VP 150,000$      13,500$     15,000$        9,000$           187,500$            90$               2,080
Director ‐ 30 hrs 110,000$      9,900$        11,000$        6,600$           137,500$            66$               2,080
Ops Manager 80,000$         7,200$        8,000$           4,800$           100,000$            48$               2,080
Total 340,000$      30,600$     34,000$        20,400$        425,000$            204$            6,240
Ave/Hr
Compensation
68.11$

Program Development and Design
The Program Development and Design will entail some extra efforts as the product
offering will be somewhat different than what is currently available. The client would like a
recommendation as to what and how the commercialized Program will look and what aspects of
the Program will be marketed.
-Because the current Program at CHI is having difficulty in getting implemented, efforts must be
taken to see where the issues are.
-CHI has a custom agreement with their partner that may impact the design of a new Program.
-Implementation (full Program) for each facility = 100/ave number of hours.
-Approximate Operational Costs (wages, travel)/Implementation = $65,000 wages + $20,000
travel = $85,000
-Estimate of Operational Costs for Implementation/for each management staff (3) =$28,333
The current Program contains the following elements:
1. Patient Meal Services – At Your Request – Room Service Dining
2. Nourishments/Floor Supplies
3. Cafeteria Services
4. Catering Services
5. Clinical Nutritional Services
6. Other Meals
7. Physician Dining

8. Meal Distribution (Meals on Wheels)
The implementation of the CHI Food and Nutrition Program is going very slow due to a
lack of leadership commitment. The Program was initially marketed to all senior and executive
leadership and approved as a national Program that was mandatory for all locations to
implement. Since that first approval, the COO and CFO have allowed two divisions to back out
of the national Program and run their own food and nutrition service. The savings projected
included all divisions so this has impacted the yearly results.
In addition, the IT component of the Program has been another issue as the Program is
reliant on IT to assist with the software for the POS, employee discounts, room service tracking,
expense tracking, etc. and IT is in the midst of implementing an Electronic Records Program
throughout the organization so their manpower is limited as well as budgeting.
How will this new Program be designed?
The new Program will need to have several components to be successful. The initial
piece of the new Program will be marketing of the offering, then there will be an assessment
conducted at the site to determine where the savings can be generated, then legal will be
involved for contracting and finally an implementation along with sustainability.
Will the new Program contain all aspects of the CHI F&N?
The new Program will contain all aspects of the CHI F&N Program but the client has the
option to not implement the entire offering at first. The mandatory items for a contract to be
considered are: installation of the software that manages all aspects of the food Program; giving
CHI authority to manage all finances and accounting; installation of the POS and cash registers;
patient meal delivery and the automation of the food production that includes all nutritionals and

recipes. The remaining items will be optional: floor stocks, physician dining, catering, vending,
outpatient nutritional consulting, meals distributions outside of hospital and hospice.
Will the new Program have standard operating procedures?
In order to be cost effective, the new Program will contain standard operating procedures
for the group managing the Program as well as standard operating procedures as part of the
contract negotiations. It will be important that the operations are compliant to procedures at the
facility level in order for the savings to be realized.
What risks are associated with this new Program?
There is a risk that the new Program will cost more than what can be achieved in net
revenues. There is also a risk that under their current agreement, their food service provider does
not agree to be a part of the new Program.
How will the new Program be tested?
In order to determine if the Program is viable and produces the expected outcomes, it will
be necessary to test it at a location that is neutral. One way to test it is to implement it at a JOA
(Joint Operating Agreement) location. This is a location that is not fully owned by CHI but
rather partly owned and managed. This will allow for an unbiased approach and feedback.
How will we charge for the new Program?
The Program will be broken into segments and different options will be available. There
will be a minimum commitment to the software, reporting, supply ordering, cafeteria and patient
ordering system as well as staffing of the food service and its management. The pricing will be
broken down for each location for software, reporting and the ordering system. Each month the
client will receive an invoice for use of each of these items as well as supplies ordered and
management fees. The monthly use fee for the software maintenance, reporting and ordering

system will be prorated at 5% of the value and the management fee will consist of a portion of
CHI management staff salaries and operating expense as well as the full expense for the food
management employees at that location. Trainings, uniforms and other employee benefits will
be prorated per the contract specifications and length. If additional features are included in the
contract, they will be invoiced as a separate line item.
There will be an initial investment by the client in the full purchase of the software and
any IT infrastructure that needs to be put in place.

Reporting and Dashboards
In order to be successful, there must reporting and dashboards available to track and
document expense and progress.
- Analytic reporting monthly for costs, savings and margins.
- Reports provided to each facility Finance leader where the Program is in place through
the software installed.
Labor Savings are currently calculated at 22% of total savings generated.
Revenue Enhancement are currently calculated at 17% of total savings generated.
Supply Savings are currently calculated at 25% of total savings generated.
Capital Savings are currently calculated at 36% of total savings generated.
What IT components are needed?
A complete assessment will need to be conducted to determine what IT infrastructure is
required before installing the tracking and management software associated with the food service
Program. Locations vary on their capabilities so this will need to be included in any Program
charge.
What equipment is needed?
Once again this will depend on the location and their ability to provide the necessary
equipment and capital improvements required to implement a Program. Based on the agreement,
it will depend on how much of the capital improvements are provided by the location and CHI.

What will the Key Performance Indicators be?
Some examples may include:
Floor Stock Costs per Patient Day
Internal Catering Costs
Patient Tray Costs
Along with cost KPI’s there will be Quality KPI’s as well and may include:
Patient Satisfaction
Tray Quality Assessment
CHI Food and Nutrition Program-Marketing
Since this is a new Program that will require a specific marketing plan for
commercialization, investment must be made to create a successful Program.
Customer Base
Since CHI is a healthcare organization, the customers will likely be in a healthcare type
of facility.
-Marketing Materials are available for internal use.
-Significant analysis has been conducted that has focused on where there is opportunity within
CHI.
Current Program
The current Food and Nutrition Program is focused on conducting an assessment at the
CHI facilities and then presenting those findings along with reasons why the Program will be of
benefit to the location.

What are our projected number of Programs to sell?
There currently isn’t a projection on the number of Programs that will be sold however
this will be determined once the financial analysis has occurred and will be included within this
Proforma a worst and best case scenario.
Who will we market as a target first for this new Program?
Our first target will be large systems with many facilities. Being able to sign an
agreement that includes many locations will create financial opportunities. Each location will
have its own Service Level Agreement.
What current CHI staff will be utilized for this new Program?
Because CHI has a strong Communications Department, staff will be utilized to assist
with all marketing materials and communications. The use of current data through the Enterprise
Intelligence Warehouse will continue and the CHI Food and Nutrition staff will work closely
with the new staff hired to create and implement the commercialization plan.
CHI attorneys and their Legal Department will also be accessed for new contracts and
service level agreements.
What are the strengths of this new Program?
The strengths of this Program are extensive and will be used in the marketing and selling
of the Program. The Program will reduce costs, food quality will be enhanced and employee and
patient satisfaction will improve. Beyond the food component, standardized financial,
operational and IT systems will be applied. Along with these items will be the extensive training
that frontline staff and managers receive.

What are the weaknesses of this new Program?
There are a few weaknesses that go with the Program that can be overcome with the right
communications and management. One area of weakness in the Program is the ability to
determine the culture at the facility and what it will take to move people to change and adapt to a
new way of doing things. Food is a very emotional subject that impacts everyone in the facility.
Understanding the emotions and expectations may be a weakness. Understanding the IT
infrastructure can also be a weakness if a thorough assessment has not been completed. This
piece of the Program is essential to its success.
What is the benefit of this new Program to the end user?
The final Program will provide a supplier to end user turnkey process that gives patients,
staff and guests high quality service and nutritional foods and competitive prices.
Marketing Plan
Designing an effective Marketing Plan will be paramount to a successful launch of the
commercialized Program. The Plan should include the pricing, product, projection and research
of contracts to execute along with all communications and platforms to be used to introduce and
sell the Program.
CHI has created several documents to utilize or build upon that were used to sell and
market the current Program to its facilities. CHI has resources for website creation and printed
and electronic documents.

Current Program
The Current Program did not require a complete marketing plan since it is designed for
implementation at the CHI facilities. The analysis conducted was for internal use only and all
information and communications as well are designed for CHI locations.
How will this new Program be advertised?
Once a complete analysis has been conducted on the market and potentials have been
determined, a marketing of the product will be determined that best fits the analysis.
How will new clients be approached?
There are several options to approaching clients that may include face-to-face meetings,
trade shows and conferences, telephone calls and advertising in medical and food publications.
Who will determine what new clients to approach?
Once again after the analysis is complete, it will be determined where the sales Program
should start. This will be predicated on the research done through the market analysis.
Who will manage this new Program marketing?
In the Program’s initial stages, it would be cost effective to have the Vice President
manage the marketing and sales of the Program. Once the Program grows, it may be financially
beneficial to hire a marketing/communications staff member to manage all publications and
communications.
Who will manage this new Program’s communications?
Because there is no specific person hired to manage communications during the initial
stages and years of growth, CHI should utilize the current Communications Department to assist
with their needs.

CHI Food and Nutrition Program-Finance
The success of the Program will stem from the data that can be provided to track and
manage. Finance management and expense management are imperative to the new Program’s
success.
Staff Requirements
The new Program will utilize staff already available at CHI with a bare bones structure to
start. As the Program grows, additional staff will be added to provide benefit to the overall
success of the commercialization.
Utilizing the CHI Food and Nutrition Program’s current staff will be important as the
Program is developed and designed. The staff that have been involved with the CHI Program’s
success will be valuable as the new Program is under construction. Recruitment of the initial
staff will be conducted by the CHI HR Department to save additional expense to hire recruiters.
Current Program
Currently the F&N Program has one staff member dedicated to hiring and managing the
HR function of the Program. As the Program develops and grows, additional staff will be
considered and utilized by the new commercialized Program.
Recruiting and retaining qualified and competent staff is costly and if done correctly and
employees managed well, will reduce the amount of turnover.
Will locations be responsible for hiring their chefs and management staff?
No. As part of this Program, CHI will manage the staff required to run the Program. In
order to manage the success of the Program, its implementation and daily production, it is

important that CHI manage the Program at a high level with specific accountabilities and
expectations.
Will specific HR benefits be provided for staff employed by CHI and the facilities?
Yes. There will be significant trainings on the operations, diversity and quality
management. Along with this for example, there will be rewards for goal achievement and a
Program to encourage excellence as well as uniforms being provided.
How much will CHI need to contract for to experience a profit with their employee
investment?
The following provides an example of a full Program implementation yearly cost to the customer
and the net profit estimate for CHI based on one system with 230,000 patient days per year:
Capital Expenditures
In most cases, the facility location will need some redesign, updating and new fixtures to
promote and sell the additional quantities needed to justify the investment in their new Program.
One Year
Per Patient
Day
Food Supplies 2,816,000$                Cost of food supplied through CHI Vendor. 12.24$
Full Program Cost 690,000$                   Full Program Implementation 3.00$
Management FTE's 300,000$                  Director of Food Service, Dietician, Chef 1.30$
Total Billable 3,806,000$                16.55$
Food Vendor Rebates 240,000$                   Rebates received through CHI vendor GPO relationship. 1.04$
Less Food Supply Expense (2,816,000)$
Total Gross Revenue 1,230,000$                5.35$
Total F&N Employee Expense 425,000$                   Three new management staff hired. 1.85$
Travel Expense 80,000$                     $2000/trip at 40 trips per year 0.35$
Marketing Expense Year One 20,000$                     Website, trade show, printed materials 0.09$
Administrative Expense 18,000$                     New staff equipment 0.08$
Total Gross Operating Expense 543,000$                   2.36$
Net Revenue Year One with One Location 687,000$                   2.99$
Based on one Facility with 230,000 patient days per year.

Capital improvements are costly and there must be a benefit to the organization if
improvements are made. Since capital is depreciated over time, the determination of who pays
for the capital improvements will need to be a part of the agreement.
- Capital Improvements are conducted by the CHI food service provider in place if they are
kitchen or point of service related.
- CHI Capital Improvements occur when there is updating to the design or interior of the
cafeteria.
Is it financially beneficial to CHI to own capital in locations where they have no vested
interest?
No. Capital requires management and if CHI owns it, they will be responsible for its
upkeep, depreciation and sale if necessary.

Recommendations
The following analysis is based on the assumptions previously provided with the
parameters that are available.
CHI Food and Nutrition Program-Operations
The CHI Operations of the F&N Commercialization Program are predicated on the use of
current staff running the CHI F&N Program as well as utilization of the CHI departments that are
already in place such as Communications, Legal, Supply Chain and Operations.
Program Staffing
The staffing of this new Program will require investment by CHI to recruit and obtain the
strong talent needed to sell, operate and manage this complex endeavor. The initial investment
will be recouped quickly once sales are obtained. Depending on how long it takes to recruit and
get the new staff up to speed with the current CHI F&N Program.
A best and worst case scenario have been analyzed and if the worst case is achieved,
there is still benefit to implementing the Program. The worst case scenario is based on one
system sale in year one and because much of the expense is absorbed by the National CHI
budget, it provides a strong case to move forward with the Program and the hiring of additional
staff to manage the sales and operations.
Observations
The cost of recruiting is absorbed into the CHI National HR Recruiting expense since this
department is already in place and can function as a partner to the new Program. The costs of the
new staff; Vice President of the Food and Nutrition Business Line; Director of Food and
Nutrition Business Line Operations and the Manager of Food and Nutrition Business Line will

cost approximately 425,000/year. Not included in these costs is the utilization of the current HR
and Finance Managers in the CHI F&N Program. In the initial stages of the Commercialization
Program these two staff can be utilized to assist with the necessary reporting and staffing of the
new employees required at the client level.
The ROI on hiring three additional staff will be achieved with one system client
contracting with CHI. This is based on the conservative analysis conducted showing that net
revenues for CHI are increased by ~$687,000 and $2.99/patient day if a system of over 200,000
patient days per year is contracted.
TOTAL INPATIENT DAYS OF CARE - Sum of each daily inpatient census for the time
period examined. For instance, if the time period examined was a week, and the daily inpatient
census was as follows: Day 1=30, Day 2=28, Day 3=26, Day 4=35, Day 5=35, Day 6=25, Day
7=25, then the total inpatient days of care for that week would be 30 + 28 + 26 + 35 + 35 + 25 +
25 or 204 total inpatient days. As opposed to discharge days which count all days the patient was
in the facility regardless of the date of admission, inpatient days of care are days of service for
those patients admitted during a specified time period.
“Total patients in 2010 were 1,140,000 with an average of 4.6 days per stay” (CDC
Government United States, 2010). Total patients = 1,140,000 at 4.6 days per stay in one year for
all hospitals. This data is based on 2010 and hospital admissions and days per stay have
decreased due to implementation of the American Affordable Care Act and reimbursements
available. “Inpatient admissions declined across all age groups. Overall inpatient utilization at
Chicago-area hospitals dropped by about 4.6 percent from 2010 to 2012” (Herman, 2014). There
are 5,723 hospitals registered in the US according to the American Hospital Association (AHA)

as of 2012. Assuming that patient admissions have fallen by 5% (1,083,000), and the average
hospital stay fallen to 3.8 days, the total patient days is equal to 1,502,121,000 (365 days per year
times 3.8 and 1,083,000). With 5,723 hospitals registered through the AHA the average number
of patient days per facility is approximately 262,470 per year. Of course this is just an average.
Many facilities have more and many have less than this number of patient days per year.
The marketing and contracting with systems containing several facilities will be key to
the success of this Program.
CHI currently has an effective Just In Time (JIT) method of distribution which helps to
keep their costs down and it will continue to be utilized as the Program moves forward.
Recommendations
The decision to move forward with the commercialization Program is predicated on the
success and credibility of the Program implementation to CHI’s full system. Before CHI takes
this leap to invest in a commercialized Program, they must make sure that their house is in order
and that the CHI Food and Nutrition Program is implemented in at least two-thirds of their
locations. This will allow them to market their experience and success to others.
Prior to implementation in two-thirds of their facilities however, they can make the
investment to begin the commercialization Program so when the organization is fully
comfortable with commercialization they can hit the ground running. The staffing of this new
Program will need to put in place several months before the actual marketing of the product.
Recommendations are to begin hiring the commercialization staff when the CHI system
is at half implementation of all facilities. By the time the commercialization is ready to go into
production, the CHI system should be implemented to the two-thirds mark.

Program Development and Design
The Program Development and Design will have the benefit of CHI already having their
Program in place in several locations. The expansion or decrease in their current Program will
be the basis for the Commercialized offering.
Observations
The current Program has encountered some setbacks with its development and design due
to some unexpected and unplanned roadblocks. IT implementation and approval of the food
service and point of service application took a significant amount of extra time to process and put
in place. This was due to an incomplete assessment based on the IT requirements.
Furthermore, the culture and the emotional attachment to food were not taken into full
consideration especially with the initial facility. Because this is a CHI Program, there was a
significant amount of pushback and not enough push to get the Program implemented. This
stemmed from the lack of upper leadership support and enforcement.
The Program is a partnership with a world class food management company and together
CHI has a world class food delivery system in place. CHI has created an efficient model that
drives the highest quality of food at the lowest costs. CHI also has very good supplier contracts
through their Group Purchasing Organization (GPO) that allows for cost reductions that can be
passed on to each facility. This Program allows CHI to own the food delivery process and to
drive the Program from the highest leadership levels.
CHI has developed a Just in Time (JIT) delivery system that is the most cost effective and
requires the least amount of labor that adds to the overall benefit of implementing this Program.

Recommendations
In order to develop a world class commercialized Food and Nutrition Program to market
to other systems, CHI must fully understand their product, its costs and its benefits to the
consumer. As part of this, extensive analysis must be conducted to determine the amount of time
it takes to implement the Program with different levels of implementation and different scenarios
that could be encountered.
In order to be successful, a clear understanding of the assessments must be put in place
with clear directions and communications as to the accuracy of the analysis conducted at a site.
The increased revenues are linked to an accurate and full assessment. Cost adjustments to the
client must be based on where they stand currently and what it will take for CHI to implement a
Food and Nutrition Program. As part of this, an operations manual should be developed based
on best practices that can be revised as necessary once a commercialized Program is sold. There
needs to be a starting point with the operations of a commercialized Program.
Reporting and Dashboards
Without good data, it is just someone’s opinion. Data is key to the success of the current
CHI Food and Nutrition Program and the implementation of a Commercialized Food and
Nutrition Program. Dashboard reporting is important communication with clients and CHI.
Observations
CHI does not currently have dashboard reporting for the facilities that are running the
Program. Reporting is taking place that provides the necessary information by location to show
the savings that the Program is generating. The current Program is not a revenue generating
Program and Food Service is classified on the Income Statement as an Operating Expense.

Recommendations
It is recommended that for the time being CHI continue with its method of reporting that
will include a daily dashboard showing the expenses incurred through the current F&N Program.
Since clients are required to install all software applications that are pertinent to the food
delivery and management Program, the collection of the data won’t be an issue. The dashboard
should be expanded to include a separate dashboard for the new Business Line of F&N. In order
for the organization to understand the financial status of the Program and the profit making at
specific facilities, there will need to be a heavier emphasis on reporting.
The savings portion of the reporting will be important to share with clients to justify the
Program in their facilities and the financial expense to CHI will also be necessary to see which
locations are the most profitable. This data will be used in marketing to other locations and will
tell the story for the F&N Commercialization.
CHI should take advantage of their current Enterprise Intelligence Department as well as
their Supply Chain Data Management Department to develop specific dashboards and reporting
for the current F&N and the Commercialized F&N.
CHI Food and Nutrition Program-Marketing
Marketing of the current and new Program is a continual process and requires significant
effort to tell the entire story of the benefits of the Program. Because the benefits of the Program
aren’t felt instantly, there can be some apprehension to implement a Program. CHI is in a
continuous mode of telling the accurate story of the current Program and communicating specific
expectations and a clear articulation of what the Program entails.

Customer Base
“One-quarter of hospitals lose money on operations and the average operating margin is
5.5 percent. In non-profit hospitals, these margins are used to make capital investments to ensure
that hospitals keep pace with technological change such as adoption of electronic health records,
meet myriad government regulations and have the resources and capacity to meet the growing
demand for care from our aging population” (American Hospital Association, 2014). The
customer base will be determined by researching the hospital systems operating at a margin of
5.0 or more in the United States. These systems will be the ones to target because they will be
looking for any possible Program that will reduce their costs but keep them competitive while
improving their patient and employee satisfaction.
Outsourcing non-clinical business is a cost saving move for many systems and if the
product provided reduces operating expense, it will be that much more appealing.
Observations
CHI currently has a full Communications and Promotions Department and the World
Class Food Service Program they are partnered with can be utilized to assist with any marketing
needs the new Program may require.
CHI has a robust internet presence as well as printers and marketing staff stationed
throughout the organization in different locations.
Nationally, lessons can be learned from the CHI Commercialized Clinical Engineering
Program that has been in place for a couple of years. They were able to develop their marketing
through the use of existing National staff with the employment of design contractors for their
internet and marketing logos and standard verbiage.

Recommendations
It is recommended that CHI continue to utilize their existing Marketing and
Communication professionals in the immediate stages of the F&N Commercialization Program.
As the Program develops and as more clients are contracted, they should look to hiring a
communications and marketing staff member. The extent to which the current National CHI
staff can contribute may be limited so relying on them should also be limited.
It is also recommended that the use of contracted staff be utilized during the pre-sale of
the commercialized offering. These contracted staff can fill in the gaps where CHI staff don’t
have the knowledge or the time to help. Leaning on the Commercialized Clinical Engineering
Program’s experience will be beneficial to the Food and Nutrition Commercialized Program
designers.
Marketing Plan
Understanding the market and where the Program will be of benefit is paramount to the
success of the Commercialized Program. A marketing plan consists of several elements.
Industry, industry availability, industry demand, pricing and awareness.
Observations
The healthcare industry currently does not have a Program available to purchase that
provides the offerings of the CHI Commercialized Food and Nutrition Program. The partnership
between the food service group and CHI is unique and is the only one in the healthcare industry.
Because of this, CHI is leading the way in the development of quality, cost effective and efficient
food service at their facilities.
The amount of time and energy it has taken to develop the current Program is significant
and the partnership agreement took over two years to complete. Now that the current design and

development of the Program are in place, emphasis can shift to commercializing the Program
and providing this same level of quality to other systems.
Recommendations
It is highly recommended that CHI review the current implementation plan and have a
clear understanding of what information can be marketed to the outside systems.
CHI must create a full marketing plan that will contain several components based on the
client they are trying to reach. For example, a nursing home will need a very different product
that the acute care hospital and the marketing materials must reflect this. Significant analysis
must be conducted to determine the pricing around different packages and what the limitations
are to each of them.
As stated above, it will be important that CHI has implemented their Program in at least
two-thirds of their locations to have the credibility to sell to other systems. While this is taking
place, efforts can be made to design a commercialized Program with marketing appeal so when
the switch is turned on, the marketing can begin.
The initial marketing plan should include the design and development of a website that
promotes the new venture. Obtaining consumer interest will be beneficial, however, the site
should not go into detail as to what the product is and what is being offered. Too much
information sharing can result in a competitor creating their own commercialized Program and
stealing the business.
Word of mouth and conducting an anonymous survey are also a good ways to get a feel
for the climate and to understand if the product to be marketed is viable. Since CHI is such a
large system, utilizing the executive level staff to ask their competitors about interest could
provide benefit down the road.

CHI Food and Nutrition Program-Finance
Creating a financial benefit to CHI is the ultimate goal of developing a commercialized
F&N Program. CHI is aware that in order to accomplish this, monies must be invested in staff to
manage, design and develop a successful Program.
Staff Requirements
Additional national management staff requirements will be needed to create, implement
and monitor existing Program sales.
Talent must be researched and recruited for individuals that are willing to take on new
challenges and new business lines. Understanding the change management process and the
development of clear understandings of culture and the emotional emphasis that food has on
individuals will be important to their success.
Observations
Staffing of the current F&N Program at CHI is complete with a Vice President, part-time
Director, Financial Manager and an HR Manager.
The staff underestimated the amount of difficulty they would encounter with
implementing the CHI Program. This wasn’t all of their fault as the leadership did not fully back
the current CHI Program and did not encourage divisions to implement even though they had
Healthcare
10%
Retirement
6%
Total
VP 150,000$      13,500$     15,000$        9,000$           187,500$            90$               2,080
Director ‐ 30 hrs 110,000$      9,900$        11,000$        6,600$           137,500$            66$               1,560
Finance Manager 80,000$         7,200$        8,000$           4,800$           100,000$            48$               2,080
HR Manager 70,000$         6,300$        7,000$           4,200$           87,500$               42$               2,080
Total 410,000$      36,900$     41,000$        24,600$        512,500$            246$            7,800
Ave/Hr
Compensation
65.71$

fully committed themselves when the Program was presented and approved. This has caused
major delays, employee satisfaction and frustration on the part of staff and locations that did not
fully understand the expectations.
Data was not available prior to the implementation of the Program and collecting it has
been cumbersome. Because each locations was able to run their own food service Programs,
there is not the detail available in all locations to fully complete an assessment or to track and
communicate savings once the Program is in place. By implementing the F&N Program, it has
created a national standardization, reporting and accountabilities to each location based on the
service level agreement that the facility has entered into with CHI.
Recommendations
Hiring qualified and competent staff to assist with the design, development and then
management of the Commercialized Program is necessary. Utilizing the current CHI HR
Recruiting staff and thus having the expense absorbed nationally, is to the best economic benefit
to the organization. Utilizing the talent of the food service organization that CHI has partnered
with will also keep the cost of recruitment to a minimum.
Keeping the salaries and benefits in line to CHI standards is important to keep the costs
of the Program as an economic benefit. The current rate of $65.71/hour per staff member is
slightly high, however, it is understood that in order to recruit the best talent, it may be more and
seen as a long-term investment.
Capital Expenditure
“Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings,
construction, and equipment used in the production of goods or in the rendering of services. Put
simply, it is the total cost needed to bring a project to a commercially operable status. Whether a

particular cost is capital or not depend on many factors such as accounting, tax laws, and
materiality” (Wikipedia, 2014).
Observations
The capital expenditures for the current CHI Food and Nutrition Program are minimal.
The food service company that has partnered with CHI has taken on the capital expense for
updating the food service Programs in each facility. The cost is then absorbed into the Program
fee that the facility is charged.
CHI does not have a warehouse and distribution Program in place for food or any other
aspect of their business.
CHI invests a significant amount of capital into facility improvements and the building of
new facilities across the country.
Recommendations
Capital expenditures should continue to be kept minimal as CHI implements a new
Commercialized Food and Nutrition Program. The location that is contracting with CHI should
either invest or follow the current business plan with the food service provider to make the
necessary improvements and then bill back to the facility the expense of the improvements.
CHI would also benefit and have a higher rate of return if they invested in a warehouse
and distribution system instead of relying on their current methods. Having a third party conduct
the distribution and warehouse the product adds to the expense of the supplies. Of course this
would not be a solution just for the Food Service Program but would have a tremendous impact
on the entire organizations finances.

Recommendations Summary
Operations
The decision to move forward with the commercialization Program is predicated on the
success and credibility of the Program implementation to CHI’s full system. Before CHI takes
this leap to invest in a commercialized Program, they must make sure that their house is in order
and that the CHI Food and Nutrition Program is implemented in at least two-thirds of their
locations. This will allow them to market their experience and success to others.
CHI should also investigate the legalities of implementing a Commercialized Program of
this nature and understand the liabilities that may go with it. CHI’s legal department is extensive
and if time isn’t available for this task, they have contracted attorneys that can be utilized.
Recommendations are to begin hiring the commercialization staff when the CHI system
is at half implementation of all facilities. By the time the commercialization is ready to go into
production, the CHI system should be implemented to the two-thirds mark.
The implementation of a basic Program in one system where the patient days per year are
estimated at 200,000 will recoup one full year of investment in staff.

In order to be successful, a clear understanding of the assessments must be put in place
with clear directions and communications as to the accuracy of the analysis conducted at a site.
The increased revenues are linked to an accurate and full assessment. Cost adjustments to the
client must be based on where they stand currently and what it will take for CHI to implement a
Food and Nutrition Program. As part of this, an operations manual should be developed based
on best practices that can be revised as necessary once a commercialized Program is sold. There
needs to be a starting point with the operations of a commercialized Program.
It is recommended that for the time being CHI continue with its method of reporting that
will include a daily dashboard showing the expenses incurred through the current F&N Program.
Since clients are required to install all software applications that are pertinent to the food
delivery and management Program, the collection of the data won’t be an issue. The dashboard
should be expanded to include a separate dashboard for the new Business Line of F&N. In order
for the organization to understand the financial status of the Program and the profit making at
specific facilities, there will need to be a heavier emphasis on reporting.
One Year Based on one Facility implementing Basic Plan
with 230,000 patient days per year. Total
Food Supplies 2,816,000$
Full Program Cost 690,000$
Management FTE's 300,000$
Total Billable 3,806,000$
Food Vendor Rebates 240,000$
Total Gross Revenue 1,230,000$
Total F&N Employee Expense 425,000$
Travel Expense 80,000$
Marketing Expense Year One 20,000$
Administrative Expense 18,000$
Total Gross Operating Expense 543,000$
Net Revenue Year One with One Location 687,000$

CHI should take advantage of their current Enterprise Intelligence Department as well as
their Supply Chain Data Management Department to develop specific dashboards and reporting
for the current F&N and the Commercialized F&N.
Marketing
It is also recommended that the use of contracted staff be utilized during the pre-sale of
the commercialized offering. These contracted staff can fill in the gaps where CHI staff don’t
have the knowledge or the time to help. Leaning on the Commercialized Clinical Engineering
Program’s experience will be beneficial to the Food and Nutrition Commercialized Program
designers.
It is highly recommended that CHI review the current implementation plan and have a
clear understanding of what information can be marketed to the outside systems.
CHI must create a full marketing plan that will contain several components based on the
client they are trying to reach. For example, a nursing home will need a very different product
that the acute care hospital and the marketing materials must reflect this. Significant analysis
must be conducted to determine the pricing around different packages and what the limitations
are to each of them.
The initial marketing plan should include the design and development of a website that
promotes the new venture. Obtaining consumer interest will be beneficial, however, the site
should not go into detail as to what the product is and what is being offered. Too much
information sharing can result in a competitor creating their own commercialized Program and
stealing the business. The design and development of a full site can be in production during this

time. In order to fulfill the revenue assumptions, CHI will need to invest the $20,000 in their
marketing plan.
Word of mouth is also a good way to get a feel for the climate and to understand if the
product to be marketed is viable. Since CHI is such a large system, utilizing the executive level
staff to ask their competitors about interest could provide benefit down the road.
Finance
Hiring qualified and competent staff to assist with the design, development and then
management of the Commercialized Program is necessary. Utilizing the current CHI HR
Recruiting staff and thus having the expense absorbed nationally, is to the best economic benefit
to the organization. Utilizing the talent of the food service organization that CHI has partnered
with will also keep the cost of recruitment to a minimum.
Hiring competent staff and retaining them is financially beneficial to CHI and will allow
them to move forward according to schedule. The cost of replacing and re-training staff is costly
and could set the project back significantly if a newly hired staff person leaves or must be
replaced. “Replacing a manager or executive who leaves for another job, or one who turns out to
be a bad hire or promotion, can be costly. It costs an average of 2.5 times an executive's salary,
and 2 times a manager's compensation, to replace them, according to the survey of 262
companies by OI Partners-The Brighton Group” (Foote, 2008).
Keeping the salaries and benefits in line to CHI standards is important to keep the costs
of the Program as an economic benefit. The current rate of $65.71/hour per staff member is
high, however, it is understood that in order to recruit the best talent, it may be more costly and
seen as a long-term investment.

Capital expenditures should continue to be kept minimal as CHI implements a new
Commercialized Food and Nutrition Program. The location that is contracting with CHI should
either invest or follow the current business plan with the food service provider to make the
necessary improvements and then bill back to the facility the expense of the improvements.
CHI would also benefit and have a higher rate of return if they invested in a warehouse
and distribution system instead of relying on their current methods. Having a third party conduct
the distribution and warehouse the product adds to the expense of the supplies. Of course this
would not be a solution just for the Food Service Program but would have a tremendous impact
on the entire organizations finances. “There is not a simple answer; this is a significant business
undertaking! As I look at it, there are several things you need to be considering, all related, some
simultaneous, some sequential: Staffing, Facility, Inventory, Transportation, Inventory, Supply
Chain Partnerships, Technology and finally Implementation” (Tecsys, 2014).
Recommendation Conclusion
CHI has great potential to implement a successful and revenue generating Food Service
Plan if every effort is taken to analyze and design and develop a Program that produces the
desired outcomes. Based on their success at their locations, they will be able to market a quality
product and provide healthy and appealing food and nutrition to the healthcare industry. Once
this is fully developed, they may choose to reach out and include other types of industries in their
consumer base such as schools, businesses, etc.
It is imperative that the highest leadership in the organization emphasize the importance
of implementing the current F&N Program. Without full executive leadership support, the
Program and the future commercialization of the Program is in jeopardy.

Because the data that is currently available does not supply the information to fully
analyze the effect of a commercialized Program, CHI must give themselves some additional time
to determine if the Program they design and implement is of value. Once CHI has fully
developed and implemented their Program in a majority of their locations they will be ready and
appropriately qualified to offer a commercialized Program that effectively meets the needs of the
healthcare industry and add to the CHI profit line.
This work will then be applied to other areas of business that can be commercialized at
CHI. For instance, the Environmental Services Program, the Linen Utilization and the
development of a linen coop at large locations such as Houston. As CHI develops each of these
business lines to commercialize, the final result will be a fully commercialized Supply Chain
Business Service Lines company that can generate significant revenues for CHI.

Program Implementation Plan
The implementation plan is predicated on the successful implementation of the current
F&N Program at CHI in half of its facilities. Without this history of success and experience
documented, the CHI F&N will have a difficult time selling and implementing a full
commercialized Program. Based on the CHI timetable of implementation the start date to begin
the design and development of the commercialized Program is January 1, 2015.
Operations
The implementation of the Operations Plan will be done with the combination of the staff
that are currently employed at CHI in the National Food and Nutrition Program as well as with
possible contracted personnel and the hiring of a small leadership team. The CHI Legal team
should be consulted to determine any liabilities or issues that may arise once this commercialized
Program is put in place. The development of an operations standards manual and a full detailed
assessment plan along with improved reporting through the Enterprise Intelligence group are
recommended before the Program is set in motion.
IMPLEMENTATION PLAN Operations
Legal Review Lead Person: Current VP of F&N Program
Questions to Answer Response
What is CHI’s legal response
to a commercialized
Program?
Current VP of F&N Program consults with current CHI legal
to determine if commercialization Program is viable and if
there are any liabilities surrounding current agreements.
What resources are being
used to answer?
Current VP of F&N Program and CHI Legal Team
How much time is required? This research should take about two months.
What tools are needed?
CHI Legal employs interns in law school. This would be a
great project for them.
Budget – hard or soft
dollars?
This is soft money since the intern is already employed by CHI
and the cost will be absorbed into the Legal budget.
Time and Effort Required?
The intern will need to explore the current GPO laws, the
liabilities surrounding the food industry and whether or not this
can be done under the current contract with the food service

provider or if a new one will need to be established. Medium-
high effort.
Costs versus the Benefit?
The benefit to implementing a commercialized Program will
far outweigh the costs incurred by the Legal team at CHI. The
costs associated with this research, will be recouped within the
first year of production if one or two sales are made to systems
that have 200,000 patient days or more per year.
Timeline?
This should be started immediately and completed within two
months.
Contracted Staffing Lead Person: HR Manager of F&N Program
If contracted staff are
needed, what is required?
HR Manager to work closely with the VP and Director to
determine what contracted staffing is required prior to the
hiring of permanent employees.
used to answer this?
The current food service Program staff can assist with
determining what additional help is needed in the preliminary
stages of the Program development.
How much time is needed?
This should require two to three one hour meetings to discuss
and come to a conclusion on the need.
Computer, phone, conference room. Access to current
reporting system.
Budget hard or soft dollars? Soft dollars since this is current staff.
Time and effort required?
This will require three weeks to discuss and determine the
need and then another three weeks to put the contracted staff in
place. Medium-high effort.
Cost versus benefit?
The cost of this will be absorbed into the current Program and
the benefit will be reaped once the commercialized Program is
in place.
Timeline?
Once the legal review is complete, this must be started and
completed within two months.
New Hire Staffing Job
Descriptions
Lead Person: HR Manager of F&N Program
What staff are needed, what
is required?
The current HR Manager can work closely with the current
F&N leadership, the food service organization and the CHI
recruiting teams.
HR Manager to work closely with the VP and Director to
determine what the roles and responsibilities of the new staff
should entail as well as working with the current food service,
and the CHI recruiting teams. Template job descriptions are
available to start from when creating these descriptions for the

new positions.
How much time is needed? Two months
What tools are needed? Computer, Microsoft software, templates
Budget hard or soft dollars? Soft dollars since HR Manager is already employed.
HR Manager will need to spend time creating these outside of
their normal responsibilities so this may take some additional
time and effort to complete. Medium effort.
The cost versus the benefit will be reaped when the new
Program is implemented.
Timeline? Start this immediately once the legal review is completed.
New Hire Staffing Lead Person: HR Manager of F&N Program
is required?
The new VP and Director will need to be hired first and the
Ops Manager hired once the Program is ready to sell.
CHI Recruiting, Taleo Recruiting software in place
How much time is needed? Three months minimum.
What tools are needed? Computer, software
Budget hard or soft dollars? Soft dollars since this is already in place at CHI.
Hiring the appropriate staff always takes time and effort.
Depending on the quality of clients to interview, it may take up
to three months to hire. Med-high effort.
The benefits of hiring good employees that will stay, far
outweighs the cost put into acquiring them.
Timeline?
Once the new job descriptions are complete the new VP hiring
process should begin. Once CHI has implemented current
Program in half of their facilities the hiring may take place.
New Hire Staffing Lead Person: HR Manager of F&N Program
is required?
The Ops Manager hired once the Program is ready to sell.
CHI Recruiting, Taleo Recruiting software in place
How much time is needed? Three months minimum.
What tools are needed? Computer, software
Budget hard or soft dollars? Soft dollars since this is already in place at CHI.
Hiring the appropriate staff always takes time and effort.
Depending on the quality of clients to interview, it may take up
to three months to hire. Med-high effort.
Cost versus benefit? The benefits of hiring good employees that will stay, far

outweighs the cost put into acquiring them.
Timeline?
Once the Commercialized Program is functional and ready to
market and sell.
Assessment Manual Lead Person: Current Director
is required?
The current F&N Director along with a contracted staff person
adept at writing procedure manuals.
Contracted staff, current F&N staff and experiences.
What tools are needed? Computer, previous assessments completed
Budget hard or soft dollars?
Hard dollars for contracted staff and soft dollars for current
Director’s time.
This will require some dedicated time to determine the best
way to design and develop the manual. Effort will be required
by the contracted staff to understand what the project entails
and what the expectations are for a completed assessment
manual. High effort.
The cost will be minimal (contracted labor at $50/hour, four
weeks=$8,000) and the benefit will be that going forward, the
assessments will be completed correctly and with the
appropriate information so the implementation can go without
surprises. This could ultimately save thousands of dollars in
time.
Timeline? This can begin once half of the CHI facilities are implemented.
Standard Operations Manual Lead Person: Current Director
is required?
The current staff will be utilized and the new Ops Director as
well as a contracted person to create and write and manual.
Current Food Directors that have implemented the current
Program. Food Service Company information and
documentation already created.
Computer, Microsoft Word, Implementation Notes and
Documentations.
Hard dollars for contracted staff with the remaining being soft
dollars. The cost will be minimal (contracted labor at
$50/hour, four weeks=$8,000) and the benefit will be that
going forward, there will be standards for operation of the
commercialized food Program.
Time and effort required? Three months to collect information and work with contractor

to complete. High effort.
The cost is minimal to the standardized and most cost efficient
way to operate a food and nutrition Program.
Timeline?
This can be started along with the assessment manual and they
can be done in tandem.
Improved Reporting and
Dashboard
Lead Person: Current Financial Manager
is required?
Representative from the Enterprise Intelligence Program and
Supply Chain Data Management.
The current dashboard reporting capabilities.
How much time is needed? Six months to one year.
What tools are needed? Lawson Software, Food Service Software, Computer
Soft dollars since these departments and staff are already in
place.
Significant effort will be necessary to develop, design and test
any new reporting or dashboards. High effort.
The cost will be absorbed by CHI and the benefit will provide
good data and reporting to track and manage a successful
Program.
Timeline?
Once Legal has given the okay to move ahead this work could
begin development. It may take a budget cycle to get it
started.
Marketing
The implementation of the Marketing Plan will be done with the combination of the staff
possible contracted personnel and the hiring of a small leadership team. CHI must create a full
marketing plan that will contain several components based on the client they are trying to reach.
A full analysis should be conducted to determine the best price to charge based on the Program
features contracted. Along with this analysis, the potential consumer pool should be analyzed
and surveys conducted to see if the Program is one that would be purchased.
The Marketing Plan will also include investment into a website and printed materials.

IMPLEMENTATION PLAN Marketing
Program Analysis and
Offering
Lead Person: New Vice President
is required?
Current Vice President, Current Director, Current
Finance Manager
Data from implemented CHI facilities, experiences,
observations, food service provider data base, industry data
How much time is needed? Three months
What tools are needed? Computer, internet, data bases, CHI data
Budget hard or soft dollars? Soft dollars, data is already available
2-3 hours per week until completed; several meetings. Med-
high efforts.
Benefit outweighs costs. New Program offering complete and
fully analyzed so the charge is appropriate and the expectations
are appropriate.
Timeline? Once new VP is hired.
Market Analysis and
Demand
is required?
Current Finance Manager
Internet, current CHI data, Food Service provider data,
Industry Data
How much time is needed? Four months
What tools are needed? Computer
Soft dollars for staff and hard dollars for industry data if
purchased.
Time and effort required? 2-3 hours per week and significant research. Med-high efforts.
Benefit will be that market is researched and it will be
determined whether a Program is viable in specific locations
and with specific systems.
Timeline?
Initial work to be completed once New VP is hired and Legal
has given the okay to proceed.
Market Survey Lead Person: Current Director
is required?
Current Finance Director
Internet, Computer

How much time is needed? 2 months
What tools are needed? Survey Monkey
Budget hard or soft dollars? CHI has corporate membership with Survey Monkey
Time and effort required? One week – 6 hours to complete survey
Benefit will be to determine what the market is looking for and
whether or not the product is in demand. Medium effort.
Timeline?
Conduct this survey once the Legal team has given okay to
proceed.
Pricing Analysis Lead Person: New Vice President
is required?
Current Vice President, Current Director, New Director
Food Service Provider data base, current CHI financial
information – profit/loss; time analysis to implement; demand
analysis
What tools are needed? Computer, Internet
Budget hard or soft dollars? Soft dollars- staff
Significant analysis will need to be conducted to determine the
best pricing model. Med-high efforts.
Cost versus benefit? Beneficial to long-term success of Program.
Timeline? Conduct analysis once new director is hired.
Marketing Communications Lead Person: New Vice President
is required?
Current Communications staff assigned to CHI Food and
Nutrition Program, New Director
Printers, designers and staff currently employed by CHI
Communications department.
Internet, brochure designer Program, computer, graphic
designer software
Budget hard or soft dollars? Hard dollars for actual printed documents.
Design and production of product will require significant time
and effort to accomplish. New product logo, name and
communication productions. High effort.
Cost versus benefit? Benefit to long-term success and immediate sales of Program.
Timeline? Begin this process once the New Director is hired.

Website Lead Person: New Vice President
is required?
Current CHI Communications staff; graphic designer, web
designer, New Director
CHI web design team, SharePoint web design
What tools are needed? Computer, Internet, SharePoint
Hard dollars to build and turn on the website that is built
exclusively for the CHI Commercialized F&N Program
This will require significant time and effort to create and since
the efforts are needed from a staff that already are working full
time on other projects, this could take significant time. High
effort.
Cost versus benefit? Benefit will outweigh costs.
Timeline?
This work will begin once the graphics have been designed
and the color scheme for the new business.
Finance
The implementation of the Financing Plan will be done with the combination of the staff
possible contracted personnel and the hiring of a small leadership team.
Since CHI manages to a fiscal year of July 1st
through June 30th
, the current Vice
President and staff will need to make sure that the new fiscal year budget contains the
appropriate amount of dollars to get the commercialized Program started. This will include the
staffing and some of the marketing and communications work.
The staffing of the new business will take place with limited resources and it may take
significant time for position fulfillment. The pool of candidates to pull the best employees from
will be determined by the current food service provider and the internet.
The capital purchases required by CHI in this commercialized business in the initial
phases of the implementation will be zero with significant capital needed later on when CHI

makes the move to warehouse and distribute the food supply as another expansion of their
business model.
IMPLEMENTATION PLAN Finance
Staffing Lead Person: Current Vice President
is required?
Current HR Manager, Current Director, New Vice President
CHI HR Recruitment, Food Service Provider talent pool and
resources; Taleo Recruitment
How much time is needed?
6-18 months since hiring will be gradual and dependent on
work progress
What tools are needed? Taleo Recruitment; Computers
Budget hard or soft dollars? Hard Dollars for recruitment expenses
2-3 hours every week until staff hiring is complete. High
effort.
The benefit will be far outweighed by the cost if staff are
qualified and retained.
Timeline?
Begin once Legal gives the okay to proceed and continue until
sale of first Program.
Capital Expenditures Lead Person: New Vice President
is required?
New Director, Vice President, Director and Finance Manager;
CHI Financial Operations SVP; CHI New Business Lines
SVP; Chief Supply Officer; VP Supply Chain Operations
CHI Financials; CHI Operations; CHI Supply Chain; CHI Real
Estate and Construction; Contracted Consulting; Current
Partnerships; Research other IDNs
How much time is needed? 2-3 years
Hard dollars once the decision is made to move forward with
distribution center.
Significant time and effort will be required to move forward
with this distribution/warehouse implementation. At least two
years of planning and implementation. Very high effort.
The benefit in the long run will outweigh the costs because
CHI will no longer be paying a third party for warehousing and
distribution.
Timeline?
Begin this process 1 year into the start of commercialized
Program.

Fund Staffing Lead Person: Current Vice President
is required?
CHI Operations Finance, New Hire Vice President
Budgeting
How much time is needed? 1 month
Budget hard or soft dollars? Hard dollars for budget
Time and effort required? Medium effort
Cost versus benefit? NA
Timeline? Begin this process prior to the upcoming fiscal year.
Fund Marketing Plan Lead Person: Current Vice President
is required?
CHI Operations Finance, New Vice President
Budgeting
Fund Marketing
Communications
is required?
CHI Operations Finance
Budgeting
Timeline?
Fund this once the work begins in the design and publications
of materials.

Fund Operations Plan Lead Person: Current Vice President
is required?
CHI Operations Finance, New Vice President
Budgeting

Program Implementation Timeline
Task Lead Start Finish
# of
Days
1/1/2015
2/1/2015
3/1/2015
4/1/2015
5/1/2015
6/1/2015
7/1/2015
8/1/2015
9/1/2015
10/1/2015
11/1/2015
12/1/2015
1/1/2016
2/1/2016
3/1/2016
4/1/2016
5/1/2016
6/1/2016
7/1/2016
8/1/2016
9/1/2016
10/1/2016
11/1/2016
12/1/2016
1/1/2017
1/1/2018
1030
Legal Review Current VP F&N 1/1/2015 3/1/2015 60
Contracted Staff Hired and Utilized Current HR Mgr 3/1/2015 6/1/2015 90
New Hires Job Descriptions Current HR Mgr 3/1/2015 6/1/2015 90
New Hire Staffing ‐ VP Current HR Mgr 3/1/2015 6/1/2015 90
New Hire Staffing ‐ Director Current HR Mgr 6/1/2015 9/1/2015 90
New Hire Staffing ‐ Mgr Current HR Mgr 9/1/2015 12/1/2015 90
Assessment Manual Current Director 4/1/2015 6/1/2015 60
Standard Operations Manual Current Director 4/1/2015 6/1/2015 60
Improved Reporting and Dashboard Current Finance Mgr 3/1/2015 10/1/2016 400
960
Program Analysis and Offering New Vice President 6/1/2015 9/1/2015 90
Market Analysis and Demand New Vice President 6/1/2015 10/1/2015 120
Market Survey Current Director 3/1/2015 5/1/2015 60
Pricing Analysis New Vice President 9/1/2015 1/1/2016 120
Marketing Communications Design New Vice President 9/1/2015 3/1/2016 180
Marketing Communications Printed New Vice President 3/1/2016 4/1/2016 30
Website New Vice President 2/1/2016 8/1/2016 180
On‐going Website Management New Vice President 8/1/2016 1/1/2018 180
2835
Fund Staffing Current Vice President 1/1/2015 7/1/2015 180
Fund Contracted Staff Current Vice President 4/1/2015 6/1/2015 60
Fund New Hire Staffing ‐ VP Current Vice President 7/1/2015 7/1/2016 365
Fund New Hire Staffing ‐ Director New Vice President 9/1/2015 7/1/2016 300
Fund New Hire Staffing ‐ Mgr New Vice President 1/1/2016 7/1/2016 180
Fund Marketing Plan Current Vice President 1/1/2015 7/1/2015 180
Fund Marketing Communications New Vice President 9/1/2015 5/1/2016 270
Fund Website Current Vice President 2/1/2016 8/1/2016 210
Fund Sales Plan Current Vice President 1/1/2015 7/1/2015 180
Fund Operations Plan Current Vice President 1/1/2015 7/1/2015 180
Future Capital Expenditures ‐ Warehouse New Vice President 1/1/2016 1/1/2018 730
Operations
Marketing
Finance

Commercialized Program Impact to CHI
has the opportunity to create significant revenues from the creation of this Food
and Nutrition Commercialization Program. Based on this Program’s design and the research
taken to find out the required needs to implement a new Program, this work will benefit any
future business lines the organization desires to put in place.
The basis of the revenue generation will be determined by the implementation of the
current Program in at least half of their facilities. The desired revenues will be predicated on the
success of the current Program and the data, learnings and financial savings generated from these
facilities and the data and long-term savings determined by the facilities that were initially
implemented.
Because this Program is not available in the industry to purchase, systems will likely be
very interested in learning more and implementing the Program if CHI can determine through its
data collections in their own system, the savings that can be generated for systems that
implement the commercialized food and nutrition Program offered.
The ROI that is possible with this Program is significant if it is managed and built to
reflect the savings that can be generated with one system install. One install at this level will
cover one full year of expense for the staff so further installations will be revenue generators for
CHI.

For example, if one Program install generates $687k in revenue another install within the
same time period will generate an additional $1.15M in revenues. Of course as the Program
grows, additional staff will be required so the costs will be higher, however, the revenues
generated far outweigh the operating costs for two full Program installations.
At an organizational level, if this Program is successful and generates the desired
revenues, CHI will need to evaluate the implementation of warehousing and distribution to save
additional monies. This work will be very labor intensive and will require CHI to invest a
significant amount of capital to fund the warehousing requirements at a division level and the
transportation needs that go with the self-distribution. “Every operational transaction of self-
distribution must be identified and analyzed in terms of people, processes, services, technology,
and facility requirements and their upfront and ongoing costs” (http://www.hida.org/, 2014).
The success of this Program will impact other areas of the organization because there will
be investments made to create other business service lines to generate revenues. The Program
design and the work done to develop a successful roadmap will be utilized by Supply Chain to
create other methods to increasing the revenues of the organization. The Environmental Services
Program will be the next business line to develop into a revenue generating operation.
One Year Based on one Facility implementing Basic Plan
with 230,000 patient days per year. Total
Food Supplies 2,816,000$
Full Program Cost 690,000$
Management FTE's 300,000$
Total Billable 3,806,000$
Food Vendor Rebates 240,000$
Total Gross Revenue 1,230,000$
Total F&N Employee Expense 425,000$
Travel Expense 80,000$
Marketing Expense Year One 20,000$
Administrative Expense 18,000$
Total Gross Operating Expense 543,000$
Net Revenue Year One with One Location 687,000$

Conclusion
In conclusion, the data required to fully analyze the expense and revenues that can be
generated by a commercialized Program is not currently available. Based on the data that is
available and the savings that have been generated in the handful of facilities that are currently
running the Program, there is strong evidence that this can be a profitable business line for CHI.
The planning for the commercialization of this Program should not be delayed but should be
carefully monitored to make sure that the planning coincides with the success of the
implementation into at least 40 CHI facilities.
The importance of the assessments cannot be under estimated for the success of the
commercialization. Continued efforts must be taken to fully understand the needs for each
assessment and carefully documented. This includes the physical attributes, electronic needs and
the human and culture needs of the facility.
The hiring of individuals should be predicated with the fact that this is an experimental
Program that may not be found to be financially viable until further into the Program
development and design. Essentially it should be treated as a start-up company that could be
very successful or could possible fail so there is risk to their continued employment. The staff
hired for the positions available should be entrepreneurial spirited and willing to take this risk.
Ultimately the success of the current Program and any future Program will be determined
by the support given by the executive leaders in the organization. “High Trust Leaders are
managers of choice who understand the impact trust always plays on two key outcomes—speed
and cost—and how low or high trust either extracts a tax or produces a dividend on every
activity and dimension within a relationship, team, or organization” (Covey, 2014). If facilities

are not mandated to implement the current CHI Food and Nutrition Program, the savings that can
be generated will be limited and the reporting of those facilities where there is no standardization
will impact the overall success of the National Food and Nutrition Program.

References
American Hospital Association. (2014). AHA responds to Time Magazine Article. Retrieved
from Seton Medical Center: http://seton.dochs.org/2013/02/american-hospital-
association-responds-to-time-magazine-story/
CDC Government United States. (2010). Discharges of inpatients from nonfederal hospitals.
Excludes newborn infants.
Covey, S. (2014). THE 13 BEHAVIORS OF A HIGH TRUST LEADER. Retrieved from
http://www.coveylink.com:
http://www.coveylink.com/documents/13%20Behaviors%20Handout%20(wtihout%20co
ntact).pdf
Foote, L. (2008, June 9). COMPANIES GROWING CONCERNED ABOUT GOOD
EMPLOYEES LEAVING AND THE COST TO REPLACE THEM. Retrieved from The
Brighton Group:
http://www.brightongrp.com/downloads/pdf/GoodEmployeesLeaving060910.pdf
Goozner, M. (2013, October). Healthcare Business News. Retrieved from Modern Healthcare:
http://www.modernhealthcare.com/article/20131025/SUPPLEMENT/310259983
Herman, B. (2014, March 11). The Decline of the Inpatient: 5 Observations.
http://www.hida.org/. (2014). Evaluating Self-Distribution. Retrieved from http://www.hida.org/:
http://www.hida.org/App_Themes/Member/docs/Self-Distribution-White-Paper.pdf
Kutscher, B. (2014, June 21). Modern Healthcare. Retrieved from Modern Healthcare:
http://www.modernhealthcare.com/article/20140621/MAGAZINE/306219968/fewer-
hospitals-have-positive-margins-as-they-face-financial-squeeze#
Tecsys. (2014). Healthcare Self Distribution: Early Considerations. Retrieved from Tecsys Your
Supply Chain Matters: http://www.tecsys.com/blog/2012/04/healthcare-self-distribution-
early-considerations-2/
Wikipedia. (2014). Capital cost. Retrieved from Wikipedia:
http://en.wikipedia.org/wiki/Capital_cost

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