Analyze the income and expenditure patterns, and formulate and recommend fiscal plans and policies

for consideration of the LGU’s Finance Committee

A feasibility study in healthcare is part of a strategic plan designed to address a medical, acute, or long term care, in
or outpatient service expansion or new development. The healthcare feasibility study and strategic planning process
encompasses several components. First, the market study identifying where the customers are and how they get
connected to your service.Second, a financial feasibility analysis, typically encompassing three to five years of pro
forma financial statements. The final step in the completion of the healthcare strategic planning process are
the business plan componentsspecifying the execution plan for making the project a reality.
A feasibility study is the process of investigating the viability of a health service, whether it is an expansion of an
existing operation or a creation of a ground up project. This study is an essential component of the strategic planning
process. The feasibility study analyzes the viability of an idea and answers a myriad of essential questions. Among
them:
 What are the primary and secondary markets?
 What is the target audience?
 What are the potential referral sources?
 What competition exists in the primary and secondary market areas?
 How much working capital is required to cover start up losses?
 At stabilization, what are the operating profits?

The above questions are just a few of the issues that are addressed by a feasibility study. If you’re looking to raise
financing for your project or perhaps seeking strategic partners, a well conceived and detailed feasibility study is a
must. Even if you are in the enviable position of not needing financing or a strategic partner, a feasibility study
provides you with an objective vetting process and a road map for a successful venture. Alternatively, the study can
also supply you with sufficient warning signs that prevents you from undertaking a potentially unsuccessful venture
which can save you lots of money and heartaches.
The second component of a feasibility study, the financial feasibility analysis, focuses on the development of detailed
operating pro forma financial statements. These statements should outline in detail, both revenue and expense items
for your project. Since these are pro forma statements, it is important to specify the myriad of assumptions that were
utilized in identifying the revenue and expense items in the pro forma. These pro forma statements can project
income/loss at the net operating line or can even take into consideration asset related expenses and thus, project
down to the net income line.
We tend to recommend that the financial feasibility analysis account for the financial performance of the proposed
project from the time of opening until 12 consecutive months of stabilized operations. Doing so allows the analysis to
cover the full start up period (which in turn identifies the amount of working capital required to sustain the operations
through the period of financial loss) and also identifies the amount of profit at the time of operational maturity.
Wouldn’t it be great if all ideas had the “field of dreams” result-if you build it, they will come. Unfortunately, the vast
majority of the time, reality is far more uncooperative. As I have mentioned before, a feasibility study is a must in the
strategic planning process. It represents an insurance policy that can assist in insulating you from making a poor
strategic choice or it can give you peace of mind that your idea is indeed a field of dreams. Either way, consider
this…a feasibility study, don’t leave home without it!

Financial Feasibility Studies: 5 Best

Practices for Hospitals
Written by Bill Wilson, Senior Vice President and Regional Manager, and Bradley DeLong, Partner,
Lancaster Pollard | July 02, 2014 | Print | Email
15
inShare
Common pitfalls and best practices for healthcare financial feasibility studies

The article below is reprinted with permission from The Capital Issue, a quarterly
newsletter published by Lancaster Pollard.

2014 began with many positive indications for capital projects in the hospital
sector.

In particular, the Patient Protection and Affordable Care Act continues to power
through obstacles, and partially as a result, many community hospitals are once
again pursuing modernization and growth initiatives. In particular, the U.S.
Department of Agriculture has funded numerous $25 million-plus critical access
hospital projects over the past several years.

With renewed interest in facility construction, expansion or renovation, providers

should keep in mind that the fundamentals of developing successful projects
have not changed. Even before architectural designs are created, organizations
need to assess their market opportunities, develop prudent business plans and
monitor execution. The building block for this entire process is a financial
feasibility study.

Forecast, compiled or examined?

The basic purpose of a financial feasibility study is to determine if a project will be
viable for an organization or business. Finding the best answer will depend on
commissioning the appropriate level of analysis for the project. The three types of
financial feasibility studies, from lowest to highest complexity, are forecast,
compilation and examination. A financial forecast may only include a basic cash
flow analysis and can be completed by a consultant or management company.
Higher levels, such as a compiled or examined report, will include more detailed
reviews of operations and market demographics and are completed by certified
public accountants. Keep in mind that the higher degree of analysis, the more
costly the study.

Additionally, the type of financial feasibility study may be determined by the

preferred debt financing structure. For example, HUD's hospital mortgage
insurance program generally relies on examined analysis. Also, tax-exempt bond
interest rates may be lowered if a compiled or examined assessment is included
with the bond offering documents. For borrowers and their investment bank, a
higher level feasibility study can be cost effective.

Regardless of the level of analysis, a financial feasibility study should act as a

business plan and provide clarity and purpose. By pulling the pieces of the
project puzzle together, it should allow the steps that follow—financing
applications and architecture work — to be undertaken with less wasted
investment in unfeasible or unwarranted projects.

The pitfall of delay

The most common pitfall with financial feasibility studies is simply not having your
financial advisor or lender involved in the early stages of planning. Unfortunately,
it is not unusual to see a capital project that has been through the planning,
design or project approval phases that has had either no analysis or the
appropriate level of analysis completed on the financial feasibility of the project.

As a result, unreasonable expectations may be set with stakeholders, such as

patients, families, board members, employees and even the community. Whether
promising that major organizational changes can be avoided, underestimating
the necessary amount of capital or projecting unrealistic timelines, a financial
feasibility study should help an organization or business avoid these mistakes
that can lead to losing hard-earned support.

Even if support for a project is particularly strong, a late start on a financial

feasibility study often leads to rework of the design, delays in construction and
organization issues. While better late than never, all of the delays associated with
a tardy study inevitably add project costs and lead to missed market
opportunities.

Best practices
A hospital is approached by a community task force requesting a new outpatient
clinic on the opposite side of town. (This is just one of the common projects
under consideration around the nation.) As discussed, providers will ideally begin
a financial feasibility study to carefully assess risk and opportunity. The following
are five best practices for organizations and businesses to pursue:

1. Conduct a debt capacity study.

The first step, before commencing with a financial feasibility study, is to
conduct a debt capacity analysis for the organization or business. Much
more limited in scope than a full financial feasibility study, a debt capacity
analysis will pinpoint financial benchmarks necessary for an organization’s
success.

Will an organization’s or company’s balance sheet provide sufficient liquidity

— cash and investment reserves? New projects often require significant
working capital, whether to fund initial training or to fund operations during
lease-up. These project funding needs generally can't be borrowed, and
ample alternative sources must be available. A debt capacity analysis won’t
answer all the necessary project questions, but will help establish a
framework for more detailed analysis.
2. Identify key service lines.
While a project often represents new opportunities, it is just as important to
identify those service lines that an organization may need to discontinue.
Service line goals are critical because whether adding or subtracting, the
result will be organizational change. The question for providers is if patients
and their families, staff and the community are prepared for the necessary
adjustments.

For example, many community hospitals would like to expand their offerings
of surgery and orthopedic services. But are staff members prepared for the
necessary training and outside assistance to make the goal achievable?
Furthermore, is a community prepared to make a necessary trade-off, such
as divesting a costly nursing home to provide the cash flow necessary for
an emergency room modernization?

Projects are exciting, but managing change can be complicated and time
consuming due to the sheer number of people and processes that may be
affected. Smart providers recognize this early in the financial feasibility
process and make the necessary accommodations in the change
management process.

3. Establish a coordinated timeline.

With project parameters and goals determined, an organization should have
its financial feasibility advisor, project manager and lender at the table to
help outline the time frames and deadline dates for different steps in the
project. The project timeline will involve a number of parallel project tasks,
some of which are completely independent and some of which may not
begin until a previous task is complete.

Often with new construction, for example, a first step is to identify how long
it will take to secure the necessary land. Once that is done, the length of
the architectural and construction contract process must be determined,
ideally with reasonable expectations for design iterations and, as necessary,
value engineering. Overlaying the whole project is securing funding, the
timing of which will be determined by the desired financing structure. To
avoid delays and additional expense, a financial feasibility study should be
pursued in conjunction with the overall project timeline. [Suggested read:
“Managing Costs: The 411 on Organization Your Construction Project.”]

4. Build realistic revenue projections.

Successful projects are built around a careful examination of the
demographics and utilization information that will support the financial
 feasibility study's revenue projections. With limited budgets, it’s important
that providers concentrate on projects with the greatest revenue potential.

Hospital organizations are facing more moving targets than ever. With the
changing health care industry, including more insured people, how will
overall utilization change and what will be the desired services? How will the
shift in payor mix to more Medicaid eligible and less private pay affect net
revenue? With continued medical advancement, will the inpatient and
outpatient mix change length of stay? A financial feasibility study may not
be a crystal ball, but it should offer careful analysis of these and many more
questions.

5. Recognize Staff as a Key Expense.

Lastly, a provider's primary expense and resource is its staff. Hospitals
often plan to hold to their full-time employee level, noting that the project
efficiencies will allow them to achieve the desired result; however, they fail
to consider that the number of FTEs tend to increase because existing
service lines do not immediately change. Successful organizations
understand staffing benchmarks and have adjusted them appropriately for
project and operational impacts.

Hospitals continue to utilize technology and medical advances to shift services

towards an outpatient model. Forward-looking providers will continue to be
presented with opportunities to grow. A financial feasibility study is not only
crucial to the decision-making process, but will help organizations maximize the
success of their projects.

A CRYSTAL BALL FOR HEALTH CARE: FEASIBILITY STUDIES CAN

HELP ELUCIDATE MAJOR DECISIONS
by Josh Lewis, Senior Manager, and Karl Rebay, Director, Health Care Practice
November 2014

Making major decisions in business can (and frankly should) be a complex process. In health care,
added complexity arises by virtue of the fact that the industry is highly regulated and margins are
thin compared to many other industries. This means it’s more challenging to make big decisions in health
care—and a heightened level of diligence is warranted when you’re considering change.

In many situations the payback period and return on investment (ROI) are simple calculations. However,
calculating revenue in health care is complicated, since many factors drive the bottom line. Most often,
 health care organizations will conduct a feasibility study to determine the economic and operational
impact of a significant strategic business decision. Ideally, these studies provide an overview of any
potential issues related to the proposed business decision, allowing executives to fully assess the effect
of any major change before a decision is made.

Let’s take a closer look at what feasibility studies are, what kinds of insight they can provide, and how
their results can be used.

WHAT CONSTITUTES A FEASIBILITY STUDY?

Feasibility studies can take many forms, ranging from simple ROI calculations to more in-depth studies;
the form really depends on the audience. For example:

 A simple financial analysis can be used to document a small project and help secure stakeholder
support.
 A sensitivity analysis that explores and compares multiple project scenarios can help managers
understand variables in a project.
 Detailed market assessments are conducted to understand demand for a service or product and can
be used by internal management to determine whether to bring a proposal to a board of directors.
 Official reports are usually required for complicated projects that require external fund-raising. (In such
cases, feasibility studies from third-party entities can provide lenders with increased confidence in a
project.)
It’s important to remember that a feasibility study refers to a disciplined approach to analyzing the
potential success of a project. As such, it’s as much a tool for management to determine whether a
project makes sense as it is a tool to convince other key constituents that a project is viable or feasible.

Note that these studies are time consuming, require the knowledge of internal management, and can be
costly. However, they should provide information needed to make good decisions, including a clear
understanding of:

 The project and its potential impact

 Resources needed, including financial, human, and technological support
 Key assumptions and drivers of success
 Organizational strengths and weaknesses that may impact success
 External forces, including related opportunities and threats
 Costs (important especially if there are competing projects)
KEY ELEMENTS OF A FEASIBILITY STUDY
The purpose of the study is to provide decision makers with the information needed to determine if the
proposed business venture or project is viable. The results need to be assessed carefully before
determining if the project has sufficient merit to move forward. Key elements of any feasibility study
include a situation assessment, market assessment, reasons behind assumptions for success, and how
investors and lenders will make a return on their investments. More in-depth studies may also include:

 Landscape analysis. This analysis looks at the marketplace and identifies any threats, including
competition and current demand, to give decision makers a more comprehensive understanding of
factors to consider.
 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 permits the organization and interested parties to
better assess assumptions, including potential construction or operating costs.
 Future demand. It’s important to quantitatively and qualitatively evaluate any factors that affect the
utilization of the new venture. For a health care system, the study will look at (among other factors)
utilization records, financial and medical staff records, population data from state agencies, local
economic information, surveys and interviews conducted with medical staff, and an assessment of
admissions to all competing providers in the primary service area.
HOW TO PREPARE FOR A FEASIBILITY STUDY
Before initiating a feasibility study, clearly define the goals of the project and articulate what success
looks like both operationally and financially. Consider what factors, in addition to ROI, are most important.
And don’t forget about the stakeholders: Remember to identify all key stakeholders in advance of starting
a feasibility study to ensure their primary goals are included in the study. Having buy-in from key
stakeholders and the company’s board will be helpful in making the study successful and deriving the
most benefit from it. Additional considerations in a feasibility study include:

 Project alignment with broader company mission statement

 Technology and system assessments
 Legal ramifications
 Market trends
 Human capital
UNDERSTANDING THE RESULTS OF A FEASIBILITY STUDY
Depending on the type of study, the results can be quite comprehensive. Generally, study results are
described in an executive summary, which includes the project background, key findings, an assessment
of external forces impacting the project, and a discussion of why the project will be successful.

This discussion typically covers the internal strengths that will drive success, forecasted financial
statements based on the detailed analytics, a summary of the forecast assumptions, and a broad
discussion of the risks associated with the project. Sometimes it will also include a discussion about the
potential impact of failure.

This information will be critical in helping management determine whether moving forward with the project
is a viable decision for the organization.

WE’RE HERE TO HELP

A feasibility study is a great tool to help answer whether a business idea makes economic sense because
it provides a thorough analysis of the opportunity and insight into all potential roadblocks. Because
feasibility studies require time and financial resources, affiliate your organization with carefully selected
partners who will carry out the analysis in an efficient and effective manner. Contact a Moss Adams
professional to learn more about what a feasibility study can do for your health care organization and how
you can attain the greatest benefit from conducting one.

Professionals at Hospicon will assess the market, economies, available infrastructure, prevailing socio-
economic conditions, government policies, facilities available as well as the existing bottle necks. Based
on the facts and figures availed from market research, a project Feasibility report will be prepared.
The objective of a feasibility study is to find out whether a healthcare management project can be done
and to brainstorm alternative solutions to make it happen.

A feasibility study should provide management with enough information to decide

Whether the project can be done

Whether the final product will benefit its intended users

What are the alternatives among which a solution will be chosen (during subsequent phases)

Whether there exists a preferred alternatives

The feasibility report will consist of financial investment data, technical data, HR consideration and (ROI)
Return on Investment of the Hospital planning project. It will be made as dynamic as possible which
would not hamper the project if any last minute changes or new incorporations are made. The report is
prepared in close consultation with our clients.

A business plan has a critical importance in healthcare management, but they procrastinate by saying
that they know their project and they have done their homework. It is true that the market scenario
changes for a hospital planning project quite fast, however entrepreneurs and investors should not rush
into New Investment without planning one.

Our qualified field workers will prepare this report in order to help the promoter determine the
objectives of his project with clarity, i.e.

Our qualified field workers will prepare this report in order to help the promoter determine the
objectives of his project with clarity, i.e.

The type of services to be provided- secondary care / tertiary care

Sophistication in building plan &equipments

Investments & returns he is looking for

The feasibility report shall bring out the following:

The potential of the planned institution

The medical facilities that are lacking and need to be made available

The migration pattern of patients

Competition from existing hospitals and new entrants

Based on the above observations and findings, a detailed project report will be prepared, with following
objectives:

To recommend required medical departments

To recommend required medical equipment

To determine required human resources

To project financial performance of a specific period of operation

To arrive at a completion date

To plan future expansion

Hospital Project Finance

Hospital Land Selection

Hospital Initial Planning

Hospital on site survey at various stage of structural construction

Hospital Area & fund allocation

Hospital Medical facility planning

Hospital Equipment planning, sourcing, pricing & selection

Hospital Project commissioning

Hospital Staff interviewing, selection

Hospital Marketing & promotion

Feasibility Study report of healthcare Management project

Hospital Project Finance

Hospital Land Selection

Hospital Initial Planning

Hospital on site survey at various stage of structural construction

Hospital Area & fund allocation

Hospital Medical facility planning

Hospital Equipment planning, sourcing, pricing & selection

Hospital Project commissioning

Hospital Staff interviewing, selection

Hospital Marketing & promotion

Feasibility Study report of healthcare Management project

SECTION 3.Functions. The Committee shall have the following functions:

a. Assess, evaluate and review all the provisions of the UNCAC and determine its
applicability and its compatibility with the existing legal framework and laws;
b. Formulate and develop plans, policies and response strategies related to the
implementation, monitoring and review compliance of the State’s treaty
obligations under the UNCAC;
c. Undertake and coordinate the implementation of integrity development and anti-
corruption measures with appropriate branches of government that will ensure its
adoption and implementation;
d. Assess and monitor good governance and anti-corruption initiatives in the
country, collating all necessary data and information on corruption-related
offenses for the comprehensive review of the implementation of the UNCAC;
e. Set up and implement a communication plan to ensure transparency and
accountability in the assessment of the good governance and anti-corruption
initiatives in the country and conduct of awareness-raising and advocacy,
particularly those contributing to the non-tolerance of corruption;
 f. Ensure compliance by the government to all its obligations under the UNCAC,
including the timely submission of treaty implementation reports, replies and
comments on cases filed with the United Nations Office on Drugs and Crime;
g. Direct and ensure the creation of internal working groups (IWGs) from among the
concerned government entities as well as the designation of focal points, and
institution of an effective system for multi-sector arrangements in the
implementation, coordination and monitoring of all related endeavors under the
UNCAC;
h. Create technical working groups (TWGs) to conduct relevant studies and
researches on relevant legal instruments, administrative measures and effective
practices aimed at preventing corruption with a view to determining their
adequacy to prevent and reduce corruption;
i. Ensure adherence to the objectives of the UNCAC of all anti-corruption programs
and good governance initiatives in the territorial and political subdivisions of the
country; and
j. Report to the President every semester and recommend policy advice and/or
measures to ensure compliance with the UNCAC;
k. Perform such other functions as may be directed by the President or as may be
necessary, consistent with the basic functions of the Committee.
l. SECTION 2: Duties and Responsibilities:

m. 1. Conduct regular meetings in pursuit of the objectives of the creation of this TWG.

n. 2. Evaluate and propose action plans/activities on Water and Climate Change Resiliency Programs for the
city.

o. 3. Work with the USAID-Be Secure Project on the proposed Technical Assistance for Water and Climate
Change Resiliency Programs for Cotabato City.

p. 4. Study possibility of public-private-partnership (PPP) in the implementation of a Water and Climate Change
Resiliency Programs for the city.

q. 5. Consolidate and coordinate all Water and Climate Change Resiliency related projects of the city.

r. 6. Study and recommend most appropriate promotion system or mechanics for a Water and Climate Change
Resiliency Programs for the city so that people may understand and accept the proposed program.

s. SECTION 3: Meetings. The Study group shall meet at least once every month or as often as necessary.

t. SECTION 4: Repealing Clause. All orders, issuances and memoranda issued inconsistent herewith are
deemed superseded, cancelled and/or revoked.

Technical working groups:

 provide technical governance

 provide expert advice to the TGA in relation to key aspects of GMP and quality
management system (QMS) inspection business
 conduct regular information sessions/forums with relevant stakeholders including
industry peak bodies and associations to ensure that effective consultation occurs
before any key policy changes are implemented.
Developed a two-year TWG work plan and performance measures that includes an accelerated National
EMS Assessment • Initiated the development of a matrix of Federal EMS responsibilities • Established
the timetable and procedures for the development of a prehospital Evidence-Based Practice Guidelines
process • Initiated review of the Model State EMS Plan developed by the National Association of State
EMS Officials • Continued to assess Federal activities and funding in support of Institute of Medicine
Report – The Future of Emergency Care in the United States Health System. • Collaborated on several
“day-to-day” Federal EMS activities