Carlsbad Home Care
In December, Joseph Blanchard became the controller of Carlsbad Home Care (CHC). After 10
years in the accounting department of a consumer products firm,
Mr. Blanchard had decided to
move into the nonprofit field where he felt his expertise would be needed. CHC, a small agency in
Southern New Mexico, offered him that opportunity.
Before Mr. Blanchard accepted the position of controller, Ms. Louise Tucker, the director of the
agency, briefed him on the agency’s financial position. Like many home care agencies, CHC had
become affiliated with a large health maintenance organization (HMO). The HMO paid a fixed fee
of $110 to CHC for each home visit.
Ms. Tucker was concerned because CHC's per-visit costs exceeded that amount, She had hired
Mr. Blanchard with the hope that he could resolve this problem. CHC's average cost per visit calcu-
lation is contained in Exhibit 1.
CHC’s goal was to provide home health visits to elderly and disabled residents of Carlsbad and
neighboring towns. Several years ago, in response to community need, it had expanded its services
to include physical therapy and social service visits. Because another organization in town, The
Canyon Home Service, provided home health aide care, CHC did not offer aide services.