Financial feasibility studies leave little to chance, telling you which opportunities to pursue and which projects to pass on because they'd eventually fail.

Say you're thinking about outsourcing your coding and billing services, changing laundry services or updating an OR for a new piece of equipment — how do you decide? You could listen to the company rep, who'll tell you you'll save 50%. You could go with your gut feeling on whether you'll save money. Or you could do a feasibility study.

My company has done about 50 such studies per year (for 20-plus years) for various investors, hospitals, surgeons, insurance companies and other related parties. That's a lot of number-crunching. But the most important number: 45% of financial feasibility studies have resulted in negative recommendations. These don't-do-its have meant about $92 million a year wasn't spent on projects that eventually would have failed.

This article serves as a first step in deciding whether to pursue an opportunity — that is, is it feasible to move forward? There'll be more decision points along the way, at any of which potential investors may or may not decide to continue with a venture. The idea is to guide and accelerate your process. Here's a look at the 10 essential steps to any feasibility study.

Executive summary
Financial feasibility reports are often long, detailed and, well, boring. Your boss, board members, surgeons, management company reps — they're busy people, and they don't want to thumb through a 10-page report to find the salient points.

Put the end at the beginning of your report, which should be no more than 1 page. It's a summary, the 1-page overview of the report that provides the major findings of your report, and is concise and non-technical. Your readers should know whether they lean toward yes or no on the proposal without having to read the rest of the report details.

History of the study
This is where your report actually begins, so give some background on what it studies and the reasons for doing so. If you're analyzing the financial feasibility of outsourcing your billing services (or switching from paper to linen or whatever), you might explain, for example, that you've been approached by or contacted a company that provides this service; that they have made appealing claims X, Y and Z; and that you have concerns about the efficiency of the current state of your billing. Provide reasons why this is the case. For example, you might explain that billing staff are falling behind with increased surgical volume.

The goals of change
State the facts of the current situation. "There are 3 people in the coding and billing office. They process this many claims per week, working 40 hours each a week. Starting 2 months ago, the workload was such that they each needed to begin working 3 hours a week of overtime."

You get the idea. Then list the goals of making a change: saving time, increasing efficiency, saving money, increasing revenue. Explain to the readers what the new company/service/product is, what it offers and the process involved in changing over or switching out.

List of positives and negatives
What are the advantages and disadvantages of doing this? The net change should be positive. Explain why it will be. Can you sell your old linen if you switch? Do you have to lay off any current staff if this is done? Consider how any negatives might affect staff morale and other non-quantifiables.

Political considerations
List anything that could be politically sensitive. For example, "the billing company we're considering is owned by one of the surgeons," or "the company we're considering has been indicted in the past for fraudulent billing practices." These may not be deal-breakers, but surprises often are. No one likes surprises — lay it all out in this report.

Regulatory issues
Anything you are thinking of doing that could trigger concern with the state board of health or licensing/accreditation agencies? Even if the answer is no, state it. The reader shouldn't have to ask.

Competitive issues
Is your competitor using this billing company or supplier or service provider? Surprisingly, my experience is that, when competitors are using the same product or service, it's easier to get board approval, because members feel they're not stepping onto an unproven plank.

What you have, what you will have
Can you save staffing costs by outsourcing? Do you need new equipment? Do you have adequate space? What kind of training might be required? How much will that be? Make a column for the current situation and proposed future(s), listing the costs and benefits for each possibility. Be as detailed and clear as you can in this section because, outside the executive summary, this part should be the second most studied section of the report and should include the financials (see "Format Financial Feasibility Like a Pro").

Timeline
Lay out the proposed schedule for making the change, from start to finish. If it's migrating coding and billing to an outside vendor, list each step and the target date for the change. If it's hiring another staffer, put the dates by which you'd complete interviews, make a hiring decision and have someone in place. If it's a project that would involve construction, such as retrofitting to accommodate a new laser, get target stage-completion timelines from the vendor to use in this section. This section should clearly show the sequence. Don't write paragraphs and paragraphs, just clearly delineate what each stage is, how long each should take, and the proposed dates by which you would act. This is a good exercise, because it gives you a solid framework to use if approval is granted.

Recommendation
You know more about this than anyone else. Objectively, what do you recommend? Be prepared to justify your recommendation to those who disagree with you. Your recommendation should be included as the last (short and to the point) paragraph on your executive summary. Nothing wishy-washy, no caveats: "I recommend contracting with a billing service." Or, "I recommend hiring an additional staff member in the billing department."