Perspective

Hospitals and health systems need to constantly assess new opportunities and programs in order to survive in a competitive market.  An organization can not assume that its current portfolio of services will meet the needs of the community in the future.  Furthermore, technological advances and new clinical protocols create services for consideration that simply were not available in the past.  Although demand for these potential programs and services may always be present, affordability is usually not a given.  A prudent organization needs to accurately predict the nature of service to be provided, its cost and the revenues it will generate before it will begin implementation of the program.

Need

To determine the economic feasibility of a project, hospitals and health systems need to be able to accurately predict the volume of services that will be consumed by the program, project the costs of operating the project, and determine the capital investments needed to start up the project.  The volumes usually drive the amount of space, equipment and personnel that the programs will need.  To be able to accurately assess the feasibility of a new service, the organization must be able to answer several key questions.

How large is the population of our market area?  Do we expect to increase the area we are serving with this new program?

What are the age and demographic characteristics of the current and future population?

What are the normal use rates of the program being evaluated?

What environmental or technological factors are likely to impact future use rates?

What are the facility, equipment and other capital requirements of the project?  How much equity will the organization need to provide to start this program?

Who is our competition today?  Are there new competitors entering the market?  How much share can we reasonably assume given the market competition?

ASR Planning can help organizations answer these and many related questions.

Idea

Our program feasibility process uses a multi-dimensional model for projecting demand.  We can assist hospitals and health systems in predicting inpatient admissions and days by clinical service or product line.  We can project future volumes of diagnostic and treatment services being used by both inpatients and outpatients.  Our model has been used in ambulatory, acute and post-acute care settings. 

We are also able to translate the volume projections into space requirements and medical equipment need.  Using regional or local cost benchmarks, we are able to estimate the construction and project costs associated with the program being studied. 

Working with your operations team we take the volume projections, in conjunction with the organization’s current staffing models and payroll structure, to create an operating model “best practice” for the new program.  The operating model is used for generating operating costs of the program.

We will then work with your finance team and financial planning consultants to take all of the preceding information, along with reimbursement projections and payer mix assumptions, to create a set of proforma financial statements.  

Benefits

The key benefits associated with our approach include:

An objective approach to evaluating the feasibility of any project, balancing facility needs with strategic, operational, and financial objectives.

A multidisciplinary team with insights on a broad variety of strategic, operations and facility planning approaches to educate and facilitate consensus building.

Integrated menu of services to support timely and informed decision making throughout the planning, design, and construction process.

Solution

Our team of seasoned healthcare consultants has generated feasibility studies for programs from replacement hospitals to assisted living centers.  We conduct ongoing research to remain current with clinical trends and technology assessments.  Our multi-disciplinary process takes advantage of consultants with the depth and breadth of experience to accomplish the task.

Contact:
Douglas Rich, FAAHC, FACHE
Managing Director
Phone:  773.929.4400
doug.rich@asrplanning.com

Office Location:
3023 North Clark Street, Suite 317
Chicago, IL 60657