Pine Street Case Study

Case Analysis

Problem Statement:

Pine Street Inn has had level amounts of funding the past few years, but now their revenue has dropped around 3 million dollars. Lyndia Downie (protagonist) is conducting two studies to cut 1 millions dollars of spending immediately as well as to reassess the Inn’s long-term plan. The lack of funding and the extreme overcrowding of the shelter was an immediate red flag to Downie, so she knew she had to take action. She decided to outsource the nursing clinic and the clothing operation in order to cut 1 million dollars from the budget. Now she must decide what long-term strategy will work best for the shelter.

Background:

Theoretical:

A theory from this class that can be applied to this case is the six-hat theory. When faced with the issue of overcrowding and lack of funds, Downie used the six hats in a well-balanced way in order to come up with the most effective long-term solution possible. One of the most used hats was the green hat (creativity), and there were a few examples of this. The first is the idea to develop permanent housing for the large majority (80%) of chronic homeless guests who stayed at Pine Street. By removing these guests from the “full serviced” shelter, future operational costs should theoretically be cut drastically. Another example was the outsourcing of two “money guzzling” parts of the operation: nursing and clothing. Downie was able to keep the same level of healthcare while saving money. She was also able to form a partnership with Goodwill to provide clothes when the guests really need it. This case also can tie into the theme of our discussion board this week, which is the importance between the end results compared to the importance of how you get there. Downie is able to lower the shelter population without actually putting a large number of homeless people back onto the streets.

Qualitative:

Pine Street Inn got to the point of overcrowding because they never turned anyone away, even when other shelters would. They didn’t discriminate against anyone no matter what their past was. In order to cut the budget down by 1 million dollars, Downie wanted to eliminate the in-house nursing clinic and clothing operation. The outsourcing of the nursing clinic was seen as highly controversial, as a lot of people in the organization believed that the new medical staff wouldn’t understand the homeless patients and would do a less adequate job at interacting with them. The clothing operation was simplified by adding a washer and dryer so that guests could wash their own clothes.

Quantitative: 

• Revenue is down at 26.9 million from 29.6 million
• $300,000 a year was being taken up by the clothing operation

Length of guest stays

• 3 days or less – 3322
• 4-10 – 1177
• 11-41 – 1048
• 42-140 – 721
• 141+ - 288

The people who took up the most beds were those who stayed 141+ nights – 49.31% of beds

The least amount of beds occupied (2.89%) was related to guests who stayed 3 nights or less, even though this category held the largest number of guests.

Budget breakdown

• 46% - emergency beds
• 18% - transitional
• 16% - permanent housing
• 14% - administration
• 4% - fundraising and volunteering
• 2% - debt service

80% of guests are “chronic homeless”

In the Culhane study, it was shown that mentally ill homeless people cost about $40.5k a year if they were kept in a shelter, hospital, or jail. If they were placed in supportive housing, it cost about $24k, about $16k of savings per person.

Analysis results

The large majority of people staying at Pine Street only stayed for a maximum of 3 days. Since such a large part of the budget is designated to emergency beds, a logical thought would be to target cutting away spending in other areas. Transitional housing and permanent housing are two areas that can be targeted in order to lower spending while still having room for the homeless who need a place to sleep for a night or two.

Alternative Actions

To address the budget issue I think Downie has to look at a few things: