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    Use Regression Analysis to forecast

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    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 in 1989 the 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 countries. With patient satisfaction scores in the top 10% of 2,000 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 S7.3, 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 such issues as (1) their specific forecasts, (2) services that would transfer to the new facility, (3) services that would remain in the existing facility, (4) staffing needs, (5) capital equipment, (6) pro forma accounting 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 273 beds. But given the growth of the central Florida region, Swanson decided 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 when needed. "With the new facility in place we are now able to handle up to 13,500 births per year," says Swanson.

    TABLE S7.3 Births at Arnold Palmer Hospital
    ________________________________________
    YEAR BIRTHS
    ________________________________________
    1995 6,144
    1996 6,230
    1997 6,432
    1998 6,950
    1999 7,377
    2000 8,655
    2001 9,536
    2002 9,825
    2003 10,253
    2004 10,555
    2005 12,316
    2006 13,070
    2007(est.) 3,600

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