Feasibility Studies: Turning Strategic Ambition into Sound Investment Decisions

Universities, health systems, and academic health centers face increasingly consequential investment decisions. Whether establishing a new medical or dental school, expanding clinical services, developing a hospital, or pursuing a strategic affiliation, these initiatives require substantial capital, organizational commitment, and long-term financial support.

While the strategic rationale may be compelling, an important question remains: Does the opportunity represent a sound, sustainable investment for the institution?

A well-designed feasibility study provides the answer and goes beyond determining whether an initiative is possible to establish whether it should be pursued, under what conditions, and with what anticipated benefits, financial commitments, and risks.

I believe feasibility studies should serve as an executive decision-making tool. The objective is to provide leadership and governing boards with the evidence, alternatives, and financial discipline necessary to make confident investment decisions.

Start With Strategy, Not Capital

One of the most common challenges in evaluating major investments is beginning with the proposed solution rather than the underlying strategic opportunity. A university may begin planning facilities for a new health professions school before fully understanding enrollment economics, clinical training capacity, or sustainable funding sources. Similarly, a health system may contemplate expansion before evaluating market demand, physician alignment, service line economics, or alternative delivery models.

An effective feasibility study begins by answering four fundamental questions:

Four fundamental questions

• Strategic Fit

  How does the proposed investment advance institutional mission, competitive positioning, and long-term priorities?

• Market Opportunity

  Is there sufficient demand, organizational capacity, and economic opportunity to support the initiative?

• Financial Sustainability

  What resources are required, what returns and benefits can reasonably be expected, and when can the initiative achieve financial sustainability?

• Risk and Alternatives

  What could prevent success, and are there more effective or less capital-intensive approaches?

These questions establish the foundation for an objective business case and ensure that investment decisions remain grounded in strategy rather than institutional momentum.

A Disciplined Approach to Building the Business Case

A credible feasibility study integrates market intelligence, operational requirements, financial analysis, and strategic alternatives into a coherent investment framework.

At Affirm Strategy, our approach focuses on five interconnected dimensions.

Five interconnected dimensions

1. 01 Define the Strategic Opportunity
2. 02 Validate Market Demand and Organizational Readiness
3. 03 Develop an Integrated Financial Business Case
4. 04 Quantify Risk and Evaluate Strategic Alternatives
5. 05 Translate Findings Into an Actionable Roadmap

1. Define the Strategic Opportunity

Establish the rationale for investment, desired outcomes, institutional priorities, and criteria for success. This includes understanding the organization’s competitive position, leadership aspirations, stakeholder expectations, and potential alternatives.

2. Validate Market Demand and Organizational Readiness

Evaluate the market conditions and operating capabilities necessary to support success.

For health systems, this includes population trends, utilization, patient migration, physician supply, payer dynamics, service line economics, and competitive positioning.

For universities, the analysis considers student demand, workforce needs, academic capacity, accreditation requirements, faculty resources, research opportunities, and clinical education partnerships.

3. Develop an Integrated Financial Business Case

Translate the proposed strategy into a comprehensive financial and operating model. The analysis should quantify capital requirements, operating costs, revenue potential, cash flow, funding sources, and investment returns. Depending on the initiative, appropriate measures may include net present value, internal rate of return, contribution margin, break-even performance, and long-term financial sustainability.

For academic health centers, the model must also reflect the economic interdependencies among academic programs, hospitals, faculty practice plans, research activities, and clinical affiliates.

Importantly, a strong business case distinguishes between direct financial returns and broader institutional or community benefits, including workforce development, improved access to care, research advancement, and regional economic contribution.

4. Quantify Risk and Evaluate Strategic Alternatives

A single financial forecast is insufficient for decisions involving significant institutional resources. Effective feasibility studies test critical assumptions through sensitivity analysis and alternative scenarios, including changes in enrollment, clinical volumes, reimbursement, labor costs, construction expenses, funding availability, and implementation timing.

Equally important is evaluating alternative strategies. A university considering a new medical school may find that an academic partnership or phased development model offers a more attractive risk-return profile. A health system contemplating new construction may discover that ambulatory expansion, service line optimization, or a joint venture creates greater value with less capital.

5. Translate Findings Into an Actionable Roadmap

The feasibility study should conclude with more than a recommendation. Leadership needs a practical implementation framework that identifies required resources, governance decisions, funding strategies, organizational responsibilities, key milestones, and performance measures. Clear decision gates allow the organization to validate progress before committing additional capital.

Understanding the Full Value of an Investment

Not every strategically important initiative produces an attractive standalone financial return.

A new medical or dental school may generate significant value through workforce development, clinical partnerships, research activity, and improved access to care, while requiring ongoing institutional or philanthropic support.

Similarly, a health system investment may strengthen regional access, improve clinical outcomes, and enhance competitive positioning even when direct financial returns are modest.

The responsibility of a feasibility study is to make these trade-offs explicit.

Financial returns, strategic benefits, and community contributions should be evaluated together, but not confused with one another.

For executive leadership and governing boards, this distinction is essential. It creates a transparent understanding of what the organization is investing, what it expects to achieve, what financial support may be required, and what risks it is accepting.

The ultimate objective is not simply to demonstrate that an initiative has value. It is to determine whether that value justifies the investment relative to other uses of limited institutional resources.

Better Decisions. Stronger Institutions. Lasting Impact.

Universities and health systems are operating in an environment of constrained capital, financial pressure, workforce challenges, and growing expectations for institutional performance. In this environment, the cost of an unsuccessful investment can extend far beyond the initial capital commitment.

A rigorous feasibility study provides leadership with the discipline to challenge assumptions, understand risk, evaluate alternatives, and allocate resources where they can create the greatest sustainable value. It also provides something equally important: the confidence to proceed when the evidence supports investment and the judgment to modify, defer, or decline an initiative when it does not.

The most important questions are “Should we do this?” and “What is the smartest way to make it successful?”