WESTMOUNT RETIREMENT RESIDENCE

The Case: Costing analysis and pricing schedule.

The Company: Westmount Retirement Residence (WRR) was established in 1997 as 125 unit retirement residences. It is located in London, Ontario.

The Issue(s): A pricing model that reflected both the size of suite inhabited and the level of medical care and service required by each individual patient.

The Analysis: WRR has 75 studios of 400 sq ft each, 35 one bedroom apartment of 500 sq ft each and 15 two bed room apartments of 600 sq ft each. It is facing increased local competition from three competitors (Exhibit-3).

WWR targeted residents over the age of 75, which was further divided into segment of independent supportive residents and second were assisted living residents. WWR employed 31 employees and in addition 15 student were acquiring clinical and managerial experience. The administrator is not clear on how much each service offered was truly costing, and therefore charged each resident the same price per month regardless of their needs. In the past, the majority of patients demanded similar services, and therefore this pricing and costing system was appropriate. However, with demographic changes to the population, some residents required intense medical care, while others were healthy and fit and required less care.

Its competitors like Chelsey Park Retirement Community offered patients with intense medical assistance purchase of nursing and medical support while other services were charged on monthly basis. The other competitor Longworth Retirement Village offered seniors who preferred more independent living a so called a la carte purchase option for amenities.

WWR’s costs were categorized into six departments. Each department was responsible for its wages, benefits supplies, traceable cost and its share of overhead expenses. All fixed cost that