Your surgeon group has projected strong returns by year two, identified a site, and engaged a developer. Before signing a letter of intent, confirm the assumptions supporting the projections.
A proforma tells you whether the numbers can work on paper. A feasibility study tells you whether they will work in your market, with your surgeons, at the size you plan to build.
Feasibility analysis is the first step in developing an ASC, and it is also the cheapest point in the project to change course if you need to. A thorough study covers the following four areas before you commit to a build.
1. Market Analysis
Every projection that follows depends on the market, so this is where a feasibility study starts.
Competitive Landscape
The first step is mapping who already performs your target procedures in your service area. This will need to include hospital outpatient departments, existing ASCs, and office-based suites. You should also look at which surgeons they have tied up through ownership or employment, and whether a nearby health system is likely to respond aggressively to a new competitor. A strong physician group can still struggle if the hospital across the street controls the referral network.
Payer Mix and Insurance Contracting
Reimbursement drives viability, and it varies more by market than many groups expect.
A center in an area heavy with Medicare and Medicaid patients runs on different margins than one with a more commercial base. The study should examine the local payer mix and test whether major commercial carriers are likely to contract with a new ASC at rates that support the model. A proforma built on rates you cannot secure is a proforma built on hope.
Demonstrated Need
Surgeon enthusiasm and community need are different things. The study should show real demand, like patients waiting too long for surgical procedures, cases leaving the area, or procedures local hospitals cannot schedule efficiently. In states with certificate of need requirements, you will have to document that need formally, and the CON process can shape your timeline and scope before design work begins.
2. Case Volume Projections
Once you know the market, the next question is how much of it your center will capture.
Most projections begin with historical case data from participating surgeons, and that is the right starting point, but you shouldn’t stop there. A center built only for today’s volume will feel tight within a few years if the group plans to grow, and those plans belong in the study.
This is where your mission and vision become real and start driving the numbers. Before projections are finalized, the partners should be able to answer questions like these:
- Are you recruiting additional surgeons in the next three to five years?
- Do you plan to add specialties, and will any of them need different room sizes or equipment?
- Which procedures now performed in the hospital could reasonably move to your ASC?
- Are total joints, spine, or cardiac cases part of the long-term plan?
Each answer changes the volume projection, and some change the physical requirements of the building.
Separate committed volume from hopeful volume. A surgeon who says they will “probably bring some cases” is not the same as one who has signed on as an investor with a defined case commitment. Require a two-year history by CPT code report of the number of procedures performed to analyze what is paid if performed in an ASC versus an office surgery suite. Weighting projections toward committed surgeons, with conservative assumptions for everyone else, gives you a realistic starting point.
It’s also important to build in a ramp-up period. New centers rarely hit full volume in the first months while surgeons shift block time, payer contracts finalize, and staff settles into workflows.
3. Overbuilding and Underbuilding
Volume projections eventually become square footage and OR count. This is where errors stop being theoretical. The errors you make at this stage get poured in concrete.
When You Overbuild
Extra operating rooms feel like future-proofing during the design phase. But on opening day, they are debt service, equipment, and utilities carried by cases that have not arrived yet. An overbuilt center can deliver excellent clinical results and still struggle financially for years because its fixed costs were sized for a volume that does not exist.
When You Underbuild
The opposite problem is quieter but just as expensive. An undersized center turns away volume, limits block time for new surgeons, and shuts out specialties the group wanted to add. Expanding an operating ASC later means construction around live cases, new regulatory reviews, and disruption to the schedule that pays the bills.
Designing for Phased Growth
The strongest plans usually land in between. Shelled space, flexible room sizing, and infrastructure planned for future ORs let a center open at a sustainable size and expand when volume justifies it.
For some groups, a hybrid office-based and ASC model offers another way to match facility size to case mix, keeping appropriate procedures in the office while reserving ASC capacity for the cases that need it.
4. Proforma and Business Plan
With the market defined, volume projected, and scope set, the pro forma finally has something solid to stand on.
A credible model reflects reimbursement by payer and procedure, staffing matched to the planned case mix, supply and implant costs, lease or construction debt, and a realistic ramp to breakeven. Every line should trace back to a finding from the earlier work. If a number cannot be explained by the market analysis or the volume projections, it does not belong in the model.
The business plan connects those numbers to the decisions partners have to make, like ownership structure, governance, capital requirements, the development timeline, and what lenders will expect to see. Groups that skip this step often end up renegotiating partnership terms in the middle of construction, which is the worst possible time. Experienced development partners have already watched those type of missteps play out, which is one of the reasons a seasoned ASC company tends to pay for itself.
A sound feasibility study will occasionally reveal “not yet” or “not here.” That answer means the study did its job, and it costs far less than learning the same lesson after the building is finished.
Get It Right From the Start With Custom Surgical Partners
An ASC is one of the largest investments a physician group will make, and the choices made during feasibility shape the center for years to come. Custom Surgical Partners brings specialized ASC development experience to feasibility, design, and construction, and our financial team reviews your numbers to determine feasibility and an appropriate scope for your project. Custom Surgical Partners is here to help.
Schedule a consultation to talk through your project before you commit to a build.
