Feasibility Studies: The Key to Evaluating Expansion Opportunity

Written by By Phillip Laux, MS


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TCTM Service AreaPopulationOHS Utilization RateTCTM Projected Volume Primary TCTM™211,0122.76582 Secondary TCTM™76,0883.22245 * The primary TCTM utilization rates can differ fromrepparttar secondary TCTM.

Utilization rates can be obtained through most state healthcare agencies or reports from third party data collection companies. Following a thorough market assessment, a cardiovascular operational review provided senior management with a detailed summary ofrepparttar 115152 current clinical area capability and what would be required for expansion. The operational analysis reviewed existing equipment, ancillary services capacity, staffing, and workflow processes. In addition, all future cardiac expansion needs were identified in a facility plan designed to provide a clinically and technically advanced program. The “state ofrepparttar 115153 art” design, One Stop Post Op™ was chosen by this facility to provide a new approach to post surgery care and a distinct competitive advantage. The One Stop Post Op model allowsrepparttar 115154 cardiovascular patient to remain inrepparttar 115155 same room from admission to discharge. The nursing care level adapts to accommodate changing patient needs. The next step was to develop an accurate financial assessment ofrepparttar 115156 proposed expansion. The financial assessment was developed with historical information sources and assumptions for sensitivity and impact modeling. The finance department provided information on payor mix, reimbursement, salary, supply and indirect expense, capital investment, and projected facility expansion costs. Due to vulnerability ofrepparttar 115157 health care environment, senior management challengedrepparttar 115158 financial model to testrepparttar 115159 impact of various cardiac expansion scenarios. Return on investment of each scenario was analyzed and evaluated to determinerepparttar 115160 profitability and margins. The demand projections wererepparttar 115161 basis forrepparttar 115162 financial model to produce a financial summary andrepparttar 115163 following financial statements: Revenue & Expense, Cash Flow, Balance Sheet, and Revenue. The financial summary provided senior management with a five year pro forma projecting average return on investment and payback period forrepparttar 115164 cardiac expansion project. In this instance,repparttar 115165 five year average ROI was 20.4% and projected payback period at 5.61 years. The Cardiovascular Expansion Feasibility Study provided senior management with a concise overview ofrepparttar 115166 needs ofrepparttar 115167 patients and community thatrepparttar 115168 hospital served. Feedback and guidance fromrepparttar 115169 medical staff was solicited and considered before a decision to proceed was made as physician support and acceptance is vital to program success. A through due diligence to accurately estimaterepparttar 115170 level of resources, both operational and capital was essential torepparttar 115171 process and permittedrepparttar 115172 organization to carefully evaluaterepparttar 115173 financial viability of expanding services. In essence,repparttar 115174 study enabledrepparttar 115175 key stakeholders to strategically decide on a course of action that could have a significant short-term effect and impactrepparttar 115176 organization’s long-range future position as an acute care provider. The community based hospital in this case study approvedrepparttar 115177 cardiovascular expansion project and usedrepparttar 115178 feasibility study in multiple ways. They were able to document need and identify an underserved population as support for state application for a CON,repparttar 115179 feasibility study providedrepparttar 115180 documentation necessary to secure financing and provided a “road map” for implementation ofrepparttar 115181 project. The report was used as a guide often duringrepparttar 115182 preplanning and start-up phase and afterrepparttar 115183 implementation of interventional cardiology and open heart surgery as a benchmark for review against actual program performance.

Conclusion

Hospitals experiencing increasing levels of financial and market risk are turning to feasibility studies to determine if they should offer new or expanded services. This case study analysis is an overview and discusses thoroughness ofrepparttar 115184 entire feasibility process. The process proved to be essential to this hospital’s strategic financial planning. Organizations, making substantial investments to expand into unfamiliar territory cannot make sound business decisions withoutrepparttar 115185 proper tools. The cost of a feasibility study is a relatively small expenditure in light ofrepparttar 115186 overall project cost, but hospitals are finding it to be essential and vital to expansion success.

Phillip Laux, MS is the finance manager with Health Care Visions, Ltd a leading cardiac consulting firm. He earned his Master of Science in Management and Technology from Carlow University in 2000 and Bachelor of Arts in Administration from the University of Pittsburgh in 1994. Phillip has over 8 years of financial reporting, statistical analysis, revenue modeling for hospitals and physicians.


Peripheral Vascular Care: Should You Have a "Vascular Center"?

Written by Barbara Sallo, RN, MBA


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In addition torepparttar patient entrance and medical staff/exam location there are a number of additional components located in areas throughoutrepparttar 115151 hospital that provide services forrepparttar 115152 PVD patient: 1.The Noninvasive Lab: ideally located in or close torepparttar 115153 Vascular Center, performs a comprehensive range of testing to diagnosis PVD, and should provide same day testing with rapid report turnaround, utilizing a dedicated staff. It is advisable forrepparttar 115154 Noninvasive Lab to be accredited by Intersocietal Commission for Accreditation of Vascular Lab and/or American College of Radiology Accreditation. 2.Magnetic Resonance Angiography: a diagnostic tool for PVD that hasrepparttar 115155 patient benefit of not requiring contrast use and few procedural side effects. The equipment requires specialized software and personnel education. A new type of contrast (MS-325) to be released next year will offer additional imaging potential. 3.Radiology Suite: provides diagnostic and intervention procedures and advanced imaging quality. It is still consideredrepparttar 115156 “Gold Standard” for diagnostic testing, invasive procedures using both radiation and iodine based contrast. Procedures are performed typically by interventional radiologists. 4.Cardiac Catheterization Lab: typically used for cardiac procedures, however, underutilized labs may provide accommodation of advanced imaging for PV catheter based procedures. Labs with high cardiac volumes may prohibit PVD procedures and non cardiology practitioners are not always made welcome. 5.Operating Room: can be equipped to provide advanced imaging for catheter based minimally invasive procedures, should involve vascular surgeon in imaging choices, fixed equipment may limitrepparttar 115157 room flexibility, sterile environment offers advantages for PVD procedures, supplies of stents and catheters should be controlled/coordinated with radiology and cath lab 6.Wound Healing Center: PVD is a common diagnosis for patients with non healing wounds. These patients may utilizerepparttar 115158 services ofrepparttar 115159 wound center resulting inrepparttar 115160 need for good coordination betweenrepparttar 115161 Vascular Center and Wound Center if they not located withinrepparttar 115162 same department. What arerepparttar 115163 Staffing Considerations of a Vascular Center? A number of physician disciplines have experience and involvement with vascular care. Today, we are seeingrepparttar 115164 emergence ofrepparttar 115165 Vascular Medicine Specialist. This physician often has a background in family practice and/or internal medicine. They can serve asrepparttar 115166 Medical Director ofrepparttar 115167 Vascular Center. This individual determinesrepparttar 115168 appropriate referral of patients torepparttar 115169 most appropriate sub specialist and maintainsrepparttar 115170 continuum of care process with daily rounding on all inpatients. The Vascular Medicine Specialist which is most common at academic medical centers can serve as attending physician for Interventional Radiologists. They also can be responsible for reading and reporting on vascular tests. While this physician staff model is growing in popularity, historically many different types of physicians have been in charge of patients’ PV care as shown in Exhibit 4. The nursing and technical staff has had a “home grown” tendency as it has only been of late thatrepparttar 115171 rationale for dedicated, trained and focused staff has taken off. The role and function ofrepparttar 115172 personnel vary from hospital to hospital but some distinct models are developing as shown in Exhibit 5. What isrepparttar 115173 Revenue Associated with PVD Care? If PVD services are provided in existing surgery and interventional radiology suites, no additional capital costs can be expected. The expansion of catheter-based care inrepparttar 115174 cath lab to include peripheral vascular interventions will give rise to additional expenses. Imaging requirements forrepparttar 115175 PVD patient may require new equipment purchases but many hospitals have been able to use existing coronary cameras. Specialized supplies are also required. Staff education and training must be expanded to include peripheral procedure techniques and potential PV complications. Revenue from PVD care providesrepparttar 115176 opportunity for healthy margins for hospitals. Medicare contribution margins for vascular DRGs compare favorably with cardiac DRG margins. Across all vascular DRGsrepparttar 115177 average contribution margin (revenue less direct costs) is more than 30 percent (Source: Market Insights, Inc., San Francisco; Cardiovascular Roundtable analysis 1999). While there are no statistics onrepparttar 115178 revenue generating figures for interventional radiologists and cardiologists treating PVD, a recent survey provides that information on vascular surgeons. Results from a survey of 1,200 hospital CFOs reveals that vascular surgeons generate an average of $2.2 million in revenue—derived from referrals and associated treatments—for their affiliate hospitals each year as show in Exhibit 6. Where to Go to from Here? Cardiovascular care is big business. This year alone,repparttar 115179 American Heart Association anticipates that $329 billion will be spent on this patient population. Whilerepparttar 115180 PVD portion ofrepparttar 115181 total is significantly smaller thanrepparttar 115182 cardiac portion,repparttar 115183 patients arerepparttar 115184 same. Peripheral vascular care is an essential component of full service cardiovascular care. There is no question thatrepparttar 115185 number of PVD patients is growing and these patients are underserved today. Hospitals must decide how to best care for this population. One ofrepparttar 115186 first steps is compiling a PVD dedicated business plan that covers: Market size/opportunity Competitive environment/issues Scope of service Physician specialties/medical coverage Clinical operations model Marketing and outreach initiatives Financial requirements/assumptions Structure/governance/ownership Conditions for success Implementation recommendations and timeline Withrepparttar 115187 growing trend toward healthcare self-education supported throughrepparttar 115188 press andrepparttar 115189 Internet,repparttar 115190 public is becoming increasingly aware ofrepparttar 115191 potential dangers of untreated vascular disease. Quality of life has taken on new meaning andrepparttar 115192 older population will continue to seek healthcare resources that will enable them to maintain active lifestyles. Be prepared forrepparttar 115193 baby boomers to seek out and demand assessment and treatment of peripheral vascular problems.

Barbara Sallo, RN, MBA is the President of Health Care Visions, Ltd. a cardiovascular consulting firm based in Pittsburgh, Pennsylvania. The firm brings extensive knowledge and expertise in this area of clinical care. Health Care Visions, Ltd. has assisted a multitude of hospitals in all phases of cardiovascular programs from market assessments, program assessments and feasibility studies to business planning and implementation.


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