Building cancer centers for the future: Practical strategies, business planning

In an era of infinite challenges and finite resources, health systems must employ a rigorous approach to strategic and facility planning. This is particularly true for oncology, where the pace of change and innovation is unprecedented.

When considering the purchase or construction of a new cancer center, it is critical to develop and hone a business plan that objectively quantifies the need for and financial viability of the project. Below are best practices for cancer business planning.

Forecast short- and long-term patient volumes.
• Model clinical volumes, at both service and modality levels, based on assumptions around key drivers (e.g., percentage growth or market capture, assumed service utilization rates).
• Ensure projections are accurate and key organizational stakeholders agree with underlying assumptions.

Develop preliminary facility-sizing estimates.
• Translate anticipated clinical volumes into projected estimates for facility requirements. Focus on total square footage requirements to support clinical departments and associated volumes.
• Estimate total square footage so initial project costs may be calculated.

Assess financial feasibility.
• Develop financial projections for the cancer pro¬gram based on all available historical information, projected patient volumes, and required capital expenditures.
• Express results on a net present value basis (any project with a positive net present value is considered financially viable).

This is part of an ongoing series from ECG Management Consultants about strategic considerations for health systems as they create new cancer facilities. Click here to read the next blog in the series. For more information, visit ECG’s website.

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