Think of a health care feasibility study as the foundation for your new post-acute care/long-term care (LTC) venture. Perhaps it’s a different line of service or an entirely new idea. In either case, without adequate support for your project, you will find you won’t get very far. That’s where the feasibility study comes in.
Before sharing the case studies, let us briefly review what a health care feasibility study is all about.
Simply put, a feasibility study is an appraisal of the viability of a proposed plan. It answers the question, “Can my venture be profitable?” Also, it provides confidence in your plan both for you and your investors, and it’s the first step you take when turning your ideas into reality.
Can my venture be profitable?
However, a feasibility study differs from a business plan in that a business plan outlines the actions needed to complete a project. A feasibility study determines whether the project is workable.
The 3 Main Goals of a Health Care Feasibility Study
A thoroughly conducted health care feasibility study should answer the following questions:
- Goal # 1: What are all of the aspects of your plan? Your study should establish a clear understanding of the proposed concept.
- Goal # 2: What are all of the potential roadblocks that could be in the way of your new project?
- Goal # 3: After considering all the evidence, is the project viable?
Every situation is different, and long-term care facilities have a unique set of requirements. Some factors you need to look at when conducting a study include:
- A construction site analysis.
- The local demographics of the community.
- The demand for senior care in the area.
- The construction cost estimate per square foot.
- Pro forma financial statements.
- Cash flow projections.
- An analysis of the potential competition.
- Space requirements of the facility.
Post Acute Care/Long-Term Care Case Studies
When considering conducting a feasibility study for your project, it’s useful to review some real-world examples to help you determine your next move.
Case study 1: Feasibility study for an assisted living/memory care project
The Fox Group, LLC was approached by a developer who wanted to open a 120-unit assisted living and memory care facility. The developer wanted to know whether there was market demand for their proposed project.
We conducted the following analyses:
- A review of the demographic and target population data.
- Demand analyses.
- An investigation into the local competition.
- A survey of the physical location.
The study found a market need for this development, and the client requested that The Fox Group complete a financial feasibility analysis.
The financial information was favorable, and in the end, the client obtained funding and developed their project. The community filled up and operates successfully today. More about this case study here.
Case study 2: Master planning/strategic development of a long-term care campus
In this instance, a non-profit health care organization wanted to know the viability of converting a hospital campus into a full-service long-term care facility. Before they proceeded, they needed answers. Some of their questions were:
- Can they maintain their mission and philosophy with their new venture?
- What are the facility requirements for an LTC campus?
- What is the community’s perception of the project?
- Was an LTC campus financially viable in this location?
The hospital’s executive team knew they did not have experience in the post-acute care field. They asked The Fox Group to conduct market studies and financial feasibility analyses for assisted living and skilled nursing facilities.
The results were promising, and together, we formed a master planning committee. In the end, a hospital tower was converted into a 119-bed skilled nursing facility, which is now open and filling up. More about this case study here.
Case study 3: Management of the development of a senior living project
Developers were planning an assisted living facility, including a memory care community and a retail business. However, they were running into issues with their design team and operator.
The developers didn’t have much experience in senior care and sought help with The Fox Group. Our analysis was that the design team needed to change.
With a new team and operating partner, the project was redesigned into a 144-bed facility. With the approval process complete, the next step is financing for the project. Once the developers secure funding, they will proceed with building the facility. More about this case study here.
What Should a Health Care Feasibility Study do for You?
A comprehensive study should determine whether your project’s income will support the operating costs while bringing in satisfactory profits. It should clarify the need for the project and determine whether the marketplace will support it. More than that, a comprehensive study should reveal new opportunities that you hadn’t thought of while also honing your focus.
While every business needs a feasibility study to get off the ground, senior care facilities have special requirements. For this reason, it often makes sense to get outside help when you are looking to begin your health care feasibility study.