Common Myths About Hospital Feasibility Studies (and What's Actually True)
Planning a new healthcare facility or expanding an existing one? You've probably heard about hospital feasibility studies. But there's a lot of confusion out there about what these studies actually involve and why they matter. Let me clear up some of the most common misconceptions I've encountered while working in healthcare planning.
A hospital feasibility study is basically a detailed analysis that helps healthcare organizations decide whether a proposed project makes sense from financial, operational, and community health perspectives. Think of it as doing your homework before making a massive investment. Yet despite how critical these studies are, myths about them persist throughout the healthcare industry.
Myth 1: Feasibility Studies Are Just Expensive Paperwork
I hear this one all the time. People assume feasibility studies are bureaucratic hoops you have to jump through, with consultants charging big fees to produce reports that end up collecting dust on shelves.
Here's what's actually true: A properly conducted feasibility study is a strategic investment, not just paperwork. According to research published in the Journal of Healthcare Management, organizations that skip or rush through feasibility studies are 3.5 times more likely to face significant budget overruns and operational challenges during project implementation.
These studies examine real market data, patient demographics, competition analysis, financial projections, and operational requirements. The information gathered directly influences decisions about everything from the number of beds to include, which medical specialties to offer, and whether the project should proceed at all.
A good feasibility study can actually save you money by identifying problems before you've invested millions in construction and equipment. It's the difference between building what your community actually needs versus building what you think they need.
Myth 2: Small Hospitals and Clinics Don't Need Feasibility Studies
Some healthcare administrators believe feasibility studies are only necessary for large hospital systems or major expansion projects. They figure smaller projects can rely on gut instinct and basic financial forecasting.
The reality is quite different. Small healthcare facilities often operate on tighter margins than large systems, which means they actually have less room for error. A feasibility study helps smaller organizations make informed decisions with limited resources.
The American Hospital Association has documented cases where rural hospitals avoided financial disaster by conducting feasibility studies that revealed insufficient patient volumes or reimbursement challenges before expanding services. One critical care facility in Montana, for instance, discovered through a feasibility study that adding a new surgical wing would cannibalize their existing outpatient services without generating enough new revenue to justify the investment.
Size doesn't determine need. The complexity of your market, competition, and financial situation does.
Myth 3: You Can Predict the Future With Perfect Accuracy
On the flip side of dismissing feasibility studies entirely, some stakeholders expect them to provide crystal-clear predictions about the future. They want guarantees about patient volumes, revenue streams, and return on investment.
What's actually true is that feasibility studies use data-driven methodologies to create reasonable projections based on current trends, historical data, and demographic analysis. They don't claim to predict the future with certainty because that's impossible in healthcare or any other industry.
Professional feasibility studies typically include multiple scenarios: best-case, worst-case, and most-likely outcomes. They identify risks and uncertainties rather than hiding them. The Healthcare Financial Management Association recommends that organizations view feasibility study projections as informed estimates that require ongoing monitoring and adjustment, not locked-in predictions.
Think of a feasibility study as a weather forecast. It uses the best available data to tell you what's likely to happen, but unexpected storms can still roll in. The value lies in being prepared for various possibilities.
Let’s Build Your Dream Hospital
Whether you’re planning a new hospital, expanding an existing facility, or upgrading your healthcare technology, Actiss Healthcare is here to guide you every step of the way. Let us help you turn your vision into reality. Contact us today for a free consultation & learn more about our services and how we can support your next healthcare project.
Myth 4: The Study Just Confirms What Leadership Already Decided
This cynical view suggests that hospital administrators commission feasibility studies only to rubber-stamp decisions they've already made. The study becomes a justification tool rather than a genuine exploration of viability.
While this unfortunately happens in some cases, it represents a misuse of the feasibility study process, not what the process should be. Reputable consulting firms conducting these studies are professionally obligated to present accurate findings, even when those findings contradict what leadership wants to hear.
Healthcare consultancy Sg2 reports that approximately 25-30% of feasibility studies they conduct ultimately recommend against proceeding with the proposed project or suggest significant modifications. That's not rubber-stamping; that's honest analysis saving organizations from costly mistakes.
When a feasibility study does support moving ahead with a project, it's because the data backs up that decision, not because someone wanted a particular outcome. The key is working with independent consultants who have no financial stake in whether your project proceeds or not.
Myth 5: Once the Study is Done, You're Finished
Many people think of feasibility studies as one-and-done documents. You commission the study, get the report, make a go or no-go decision, and then you're finished with it.
Actually, a feasibility study should serve as a living reference document throughout your project and beyond. The baseline data, market analysis, and projections established in the study become benchmarks for measuring actual performance against expected performance.
Healthcare projects often take years from initial planning through construction to full operations. During this time, market conditions change, regulations shift, and unexpected challenges arise. Smart healthcare organizations revisit their feasibility studies regularly, updating assumptions and adjusting plans as needed.
Some organizations even conduct follow-up feasibility assessments at key project milestones to ensure the original assumptions still hold true. This approach helps catch problems early when course corrections are still possible and affordable.
Myth 6: All Feasibility Studies Are Basically the Same
When you're shopping for feasibility study services, you might think all providers offer essentially the same product at different price points. Just find the cheapest option and you're good to go, right?
Not quite. Feasibility studies vary significantly in scope, depth, methodology, and quality. A comprehensive hospital feasibility study should include:
- Demographic and population health analysis for your service area
- Market demand assessment for specific services
- Competitive landscape evaluation
- Physician and medical staff availability analysis
- Financial projections including capital requirements and operating budgets
- Regulatory and certificate of need considerations
- Site analysis and facility planning recommendations
- Risk assessment and mitigation strategies
- Implementation timeline and phasing options
Some consultants cut corners by relying heavily on generic data rather than conducting primary research specific to your market. Others might excel at financial modeling but lack expertise in clinical operations or vice versa.
The Health Research and Educational Trust found that feasibility studies conducted by firms with specific healthcare expertise produced significantly more accurate projections than those done by general business consultants. Your choice of consultant matters tremendously.
Myth 7: Financial Projections Are the Only Thing That Matters
It's easy to focus exclusively on the financial section of a feasibility study. After all, hospitals need to stay financially viable to serve their communities. Board members and investors naturally gravitate toward the numbers.
But here's what gets overlooked: the best feasibility studies balance financial viability with community health needs, clinical quality considerations, and operational practicality. A project might look great on paper financially but fail to address actual community health priorities or strain your organization's operational capacity.
The Institute for Healthcare Improvement emphasizes that sustainable healthcare projects must align financial goals with improved patient outcomes and community health metrics. A pediatric specialty center might not generate the highest profit margins, but if your community has a significant gap in pediatric services, it might be the right investment from a mission perspective.
Look at feasibility through multiple lenses: financial sustainability, community benefit, clinical quality, strategic positioning, and operational feasibility. All these factors need to work together for long-term success.
Let’s Build Your Dream Hospital
Whether you’re planning a new hospital, expanding an existing facility, or upgrading your healthcare technology, Actiss Healthcare is here to guide you every step of the way. Let us help you turn your vision into reality. Contact us today for a free consultation & learn more about our services and how we can support your next healthcare project.
Myth 8: You Need to Wait Until You Have All the Details Figured Out
Some healthcare leaders delay commissioning a feasibility study until they've worked out every detail of their proposed project. They want to present consultants with a fully formed plan rather than a general concept.
The truth is that feasibility studies work best when conducted early in the planning process, sometimes even before you've settled on specific project details. The study itself helps you refine your concept based on market realities and financial constraints.
You might start with a general idea like "we need to expand our cardiac services" without knowing whether that means adding catheterization labs, expanding ICU capacity, building an outpatient cardiac rehab center, or some combination. A feasibility study examines your market and helps you determine which approach makes the most sense.
Starting the study too late in the planning process means you've already invested time and resources developing plans that might not align with market demand or financial reality. Get the feasibility study done early, then use its findings to shape your detailed planning.
Myth 9: Community Input Isn't Really Necessary
Some administrators view community engagement as a nice-to-have rather than essential component of feasibility studies. They figure market data and financial analysis tell the whole story.
What's actually true is that direct community input provides insights you can't get from demographic data alone. Community members can tell you about access barriers, unmet needs, and preferences that don't show up in utilization statistics.
For example, your data might show low utilization of mental health services in a community, but conversations with residents could reveal that stigma and lack of culturally competent providers are the barriers, not lack of need. That changes your whole approach to service planning.
The Agency for Healthcare Research and Quality has found that healthcare projects developed with meaningful community engagement are more likely to achieve utilization targets and community support. Plus, in many states, certificate of need applications require documentation of community input, so you'll need it anyway.
Myth 10: Digital Tools Have Made Traditional Feasibility Studies Obsolete
With the rise of big data analytics and AI-powered forecasting tools, some people question whether you still need traditional feasibility studies. Can't software do this analysis faster and cheaper?
Technology has absolutely improved how feasibility studies are conducted, but it hasn't replaced the need for human expertise and local knowledge. Data analytics tools are powerful for processing large datasets and identifying patterns, but they require skilled interpretation within the context of your specific situation.
A Harvard Business Review study on healthcare analytics found that the most accurate projections came from combining sophisticated data analysis with experienced consultant judgment. Algorithms can tell you that your service area has an aging population, but experienced healthcare consultants can tell you how that specifically impacts demand for different services based on patterns they've seen in similar markets.
The best feasibility studies today use technology as a tool while still applying critical thinking, local market knowledge, and healthcare expertise to the analysis.
How to Get Real Value From a Feasibility Study
Now that we've busted these myths, how do you actually make sure your feasibility study delivers real value? Here are some practical tips:
First, choose your consultant carefully. Look for firms with specific experience in your type of facility and geographic region. Check references and ask about their track record for projection accuracy.
Second, be honest about your assumptions and constraints from the start. Don't hide challenges or present an overly rosy picture of your current situation. Garbage in, garbage out applies to feasibility studies just like any other analysis.
Third, actively participate in the process. The consultant brings methodology and expertise, but you bring knowledge of your organization, community, and strategic goals. The best studies are collaborative efforts.
Fourth, insist on clear explanations of methodology and assumptions. You should understand how the consultant arrived at their conclusions, not just what those conclusions are.
Finally, plan to use the study as an ongoing reference document, not a one-time deliverable. Build in periodic reviews and updates, especially for long-term projects. If you're wondering when to hire a hospital project consultant, the feasibility stage is often the ideal starting point.
Comparison: Good vs. Poor Feasibility Studies
| Aspect | Good Feasibility Study | Poor Feasibility Study |
|---|---|---|
| Data Sources | Combines multiple primary and secondary sources specific to the market | Relies primarily on generic national data |
| Community Input | Includes surveys, focus groups, and stakeholder interviews | Skips or minimizes community engagement |
| Financial Projections | Provides multiple scenarios with clear assumptions | Shows only one optimistic projection |
| Risk Analysis | Identifies specific risks and suggests mitigation strategies | Glosses over or ignores potential challenges |
| Recommendations | Objective analysis that may recommend against proceeding | Always supports the proposed project |
Conclusion
Hospital feasibility studies are essential tools for healthcare planning, but only when you understand what they can and can't do. They're not magic crystal balls that predict the future with certainty, nor are they expensive rubber stamps for predetermined decisions. When done right, they're rigorous, data-driven analyses that help healthcare organizations make informed decisions about major investments.
The key is approaching feasibility studies with realistic expectations and a commitment to honest analysis. Work with experienced consultants, engage your community, examine multiple scenarios, and use the study as a living document throughout your project. By avoiding these common myths and focusing on what feasibility studies actually offer, you'll be much better positioned to make smart decisions about your healthcare facility's future.
Whether you're planning a small clinic expansion or a major hospital development, don't let misconceptions lead you astray. A well-executed feasibility study is one of the smartest investments you can make in your project's success. For comprehensive support throughout your project, consider exploring hospital project consultancy services that can guide you from feasibility through completion.
Frequently Asked Questions
How long does a typical hospital feasibility study take to complete?
Most comprehensive hospital feasibility studies take between 8 to 16 weeks to complete, depending on the project's complexity and scope. Smaller projects like adding a single department might be done in 6-8 weeks, while major new hospital developments could require 4-6 months. The timeline includes data collection, market analysis, stakeholder interviews, financial modeling, and report preparation. Rushing the process usually compromises quality, so give your consultants adequate time to do thorough work.
What does a hospital feasibility study typically cost?
Costs vary widely based on project scope, geographic location, and consultant expertise. Small facility studies might run $25,000 to $50,000, while comprehensive studies for major hospital projects can cost $100,000 to $300,000 or more. This might seem expensive, but it's typically less than 1% of total project costs for major developments. Considering that these studies can prevent multi-million dollar mistakes, they're usually worth the investment. Get detailed proposals from multiple firms to understand what's included in their pricing. Learn more about avoiding hospital budget mistakes to maximize your investment.
Can hospital feasibility studies be used for loan applications and investor presentations?
Absolutely. Lenders and investors typically require independent feasibility studies before committing funds to healthcare projects. Banks want to see realistic financial projections and market analysis before approving construction loans. Private investors and bond holders use feasibility studies to assess risk and potential returns. Make sure your consultant knows the study will be used for financing purposes, as lenders often have specific requirements about what the study must include and how projections should be presented.
How often should feasibility studies be updated for ongoing projects?
For projects with long development timelines, plan to update or refresh your feasibility study every 12-18 months or whenever significant market changes occur. If your project timeline extends beyond two years from the original study, definitely conduct an update before breaking ground. Also update if major assumptions change, like losing a key physician group, facing new competition, or experiencing significant demographic shifts in your service area. Some organizations do annual reviews of key metrics against the original projections to catch problems early.
What happens if a feasibility study recommends against moving ahead with a project?
If the feasibility study advises against proceeding, you have several options. First, carefully review the findings to understand exactly what concerns were identified. Sometimes you can modify the project scope, phasing, or approach to address those concerns. Second, you might need to wait until market conditions improve or certain prerequisites are met. Third, you could seek a second opinion from another consultant if you question the methodology or findings. Or fourth, you accept the recommendation and avoid a potentially costly mistake. Remember, discovering a project isn't viable before investing millions is actually a success, not a failure. You might also want to review this hospital feasibility checklist to assess if your town is ready for a new healthcare facility.
