The Critical Role of Gap Analysis in Planning New Hospitals in Emerging Markets

In emerging economies, critical gaps in planning new hospitals are often overlooked, especially the availability of skilled high quality professional workforce. (full article)

There is a concerning trend in planning new healthcare facilities in emerging markets when governments, investors or developers sometimes appear to not recognize crucial gaps in feasibility studies. Essential aspects are not being thoroughly evaluated before the critical go-no go decision is made to begin serious construction resulting in cost overruns or downstream delays. No matter the size or complexity of the facility envisaged, a careful compilation of all the feasibility information is required before any ground is broken or commitments to major capital works are sealed.

Developers, governments or investors often aspire to create an iconic hospital with a fixed number of beds providing a predefined array of clinical services without regard to key drivers such as market demand or regional burden of disease. In order to reach an informed decision, among the many coordinated studies that are needed, the following are needed:

  • market analyses;
  • understanding of local disease trends ;
  • competitor analyses  (including their plans for growth and/or introduction of new services);
  • estimates of how the population in the particular region will change over time;
  • analyses of how those demographic changes or other market forces will influence payment for services;
  • understanding of the regulatory environment in which the new facility/institution will operate.

Failure to include any of these factors in financial analyses can seriously skew the numbers and mislead investors or operators.  Costly adjustments to plans, or worse still, ultimate failure can be avoided by a) ensuring that the pre-decision feasibility studies have in fact included all the requisite dimensions, and b) the various preparatory studies are all brought together to permit analysis of gaps and developing of appropriate phasing of the program.  The most common omissions in feasibility studies include:

  1. Failure to analyze in detail the local healthcare market.  Many new markets are keen to include medical tourists in their business plans.  The reality is that, almost without exception, local demand for services must be present or the project may be imperiled;
  2. Detailed clinical program planning;
  3. Establish correct phasing of the project for the unique context that each new development represents, and;
  4. Analysis of workforce – how the new institution will be staffed (how many staff will be needed, where will they come from, how they been trained, what are their professional standards).

Of these, the most frequently overlooked item is the final one listed above – workforce.  When key information is missing or essential steps are overlooked, costly overruns and time delays often supervene.  This can be avoided by ensuring that the right skill mix and professional experience is available when the feasibility studies are being planned and the data is being analyzed before the final of commitment to significant investment is taken.