Conducting a feasibility study is an essential step in determining the viability of implementing a new healthcare program, service, or project. These studies help healthcare organizations assess the potential risks and benefits of their proposed projects before investing significant time, money, and resources into planning for them.
Feasibility Studies 101
Feasibility studies typically involve an assessment of the healthcare market, including the target population and their healthcare needs. The study may also evaluate the availability of resources, such as staff and funding, as well as the regulatory and legal requirements for implementing the proposed project.
Generally, the study will include:
- Landscape Analysis. This analysis looks at the marketplace and identifies any threats to give decision makers a more comprehensive understanding of factors to consider. Examples of threats include competition and current demand.
- Financial Forecasts. The study assesses the prior three years of the organization’s historical financial results and the forecast of future operating results, financial position, and cash flow during the forecast period. Understanding future financial performance helps permits the organization and interested parties to better assess assumptions, including potential construction or operating costs.
- Future Demand. It’s important to completely evaluate all factors that can impact the implementation of a new program. Utilization records, financial and medical staff records, population data from state agencies, local economic information, surveys or interviews conducted with medical staff, and an assessment of admissions to all competing providers in the primary service area.
Decision-Making Made Easier with Feasibility Studies
The results of a feasibility study can help healthcare organizations make informed decisions about whether to proceed with a project, modify it, or abandon it altogether. It can also help organizations anticipate and mitigate potential risks.
Blue & Co. has performed feasibility studies for many of our healthcare clients. Our firm is well positioned to help your organization conduct such a study. To learn more about how we can help, please reach out to your local Blue & Co. Advisor or the contact below.
Larry King, CPA, FHFMA, Director-in-Charge