Possible Risk:

1. Demand will not continue to grow dramatically. The hospital believes that the new building will attract new OB/GYN doctors to deliver there. The other major hospital chain in Orlando, Florida Hospital, has also just announced a major expansion. This may flood the hospital bed market in the short run.

2. The population boom in Central Florida could abate with rising housing prices that are discouraging future growth. During the 20082010 recession, population in Central Florida leveled off.

3. Unforeseen disasters in medicine could damage the hospitals sterling reputation (e.g., lawsuits, drop in quality).

4. There is a nursing shortage that could create a staffing bottleneck if not corrected. Recently, the two major hospital chains in central Florida got into a bidding war in attempts to recruit each others nurses.

Regression analysis on the birth data in Table S7.4 yields:

Y = projected births = 9,548.86 + 315.24x

(where x = time in years; x = 1 is 2000, x = 2 is 2001, x = 18 is 2017).

The r = .87, so r² = .76, a high coefficient of determination.

To forecast the point at which the top two floors will need to be built out, we examine 2018, x = 19 y = 15,538. For 2019, x = 20 y = 15,854, and for 2020, x = 21 y = 16,169.

So the top two floors may need to be built out by 2020.

Question:

The following plot of births over years indicates what is happening with the actual number of births. This plot may spark an interesting discussion of the limitations of statistics and suggest more analysis before building out the additional two stories in 2020. Why did births increase through 2008 but drop in 20092011? Why was there a decline from 2015 to 2017?