The Mandate
A nonprofit rural health system operating four community clinics engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a USDA CF financing request for a project located in Faulkner County, Arkansas. Total project capitalization fell within the $3M-$5M band. The capital provider, a USDA Rural Development field office, required documentation consistent with current program review standards. The analytical question put to the team: Did service-area patient volumes and federally qualified health center reimbursement support a 14,000-square-foot clinic expansion.
Engagement Scope
- Primary market area defined as a 20-mile drive-time
- Comparable supply set of 7 properties
- Demand model framework: patient-encounter capture and reimbursement build
- Financial projection horizon: 15 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 20-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of healthcare assets in Arkansas. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 7 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a patient-encounter capture and reimbursement build approach over a 15 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.5 across the projection window, with a stabilized capture rate of 3.8%.
Exhibit 1: Comparable Supply Set, Arkansas PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 15 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Service-area patient encounters grew at a 4.2% trailing CAGR with capacity constraints at the existing facility.
- Comparable rural health clinics achieved 18 to 24 monthly encounters per provider FTE.
- Reimbursement mix of 38% Medicaid, 31% Medicare, 24% commercial supported the financial model.
- USDA Community Facilities essential community facility criteria confirmed.
Deliverable
The delivered report ran 118 pages with 26 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the USDA Rural Development field office. The corresponding USDA CF review framework guided exhibit selection and supporting documentation.