Prepared for lenders, CDCs, and federal agencies to SBA SOP 50 10 8, USDA 7 CFR Part 5001, and conventional underwriting standards. Fiduciary duty runs to the lender and the agency, never the borrower. 4,000+ engagements since 1998 covering $41.2 billion in evaluated project value. So far in 2026: 41 engagements and $1.54 billion evaluated — 17 SBA, 11 USDA.
Critical access and rural hospital projects — replacements, conversions under the Rural Emergency Hospital designation, and service-line restorations — are underwritten on a different chassis than urban facilities: cost-based and designation-driven reimbursement, a service population defined by distance, and a payer mix that leans government. The study documents the designation status and its reimbursement consequences, sizes realistic volumes from the service area's actual utilization and outmigration history, and tests sustainability against the staffing economics that decide whether rural facilities live: physician coverage, traveling-clinician cost, and the recruitment plan behind both.
Volume modeling from service-area discharge and emergency-visit data with outmigration quantified, reimbursement modeled to the designation's actual rules rather than generic hospital ratios, swing-bed and outpatient lines built separately, and a federal-and-state support layer documented program by program.
Every Wert-Berater financial model is fully linked with no hardcoded values, so any reviewer can stress any input. Deliverables comprise a complete narrative report and the linked Excel model, with ten-year pro forma, sensitivity analysis at ±5, 10, and 15 percent, interest-rate stress from +0.5 to +3.0 percent, and ratio analysis benchmarked against RMA and IBISWorld data.
SBA engagements are prepared to SOP 50 10 8, including its debt-service-coverage minimums of 1.15x operating and 1.00x global. USDA engagements follow RD Staff Instruction 5001 across the Business & Industry, Community Facilities, REAP, and Value-Added Producer Grant programs. Conventional engagements are built to the lender's stated coverage standard, typically 1.20x. Rural hospitals are the archetypal USDA Community Facilities credit, with B&I serving for-profit structures; the 7 CFR 5001 factor framework and agency review expectations are native territory for the firm's rural practice.
The engagement extends the firm's standing rural community-facility record — schools, clinics, and senior care — into the hospital designation framework. Independence is non-negotiable: determinations follow the evidence and are not revised under pressure, and studies are built to pass lender, agency, and third-party review without exception items.
A feasibility study for a critical access or rural hospital is not a repurposed clinic study with a larger bed count inserted. The scope is built around the designation framework, the cost-based reimbursement structure, and the federal and state program layers that together determine whether the project is financially viable. The engagement opens with a designation analysis — confirming CAH eligibility criteria, the 35-mile or mountainous-terrain distance standard, the 25-bed limit, and the average length-of-stay ceiling — because a single eligibility defect changes the entire reimbursement model.
Demand analysis for a rural or critical access hospital starts where urban hospital studies cannot: the service area is defined by geography and drive time, not by competitive density, because the whole premise of the CAH designation is that the facility is the only proximate source of inpatient care. That premise must be tested, not assumed. The analysis confirms actual drive times to the nearest alternative acute-care facility using road-network data, then documents the outmigration rate — the share of residents who bypass the local facility — using state all-payer discharge data or Medicare claims extracts available through CMS geographic variation files.
Primary data sources for this asset class include state hospital discharge abstract databases, CMS cost reports filed on Form 2552, Medicare geographic variation public use files, state health department licensure records, and county-level population and age-cohort projections from Census Bureau estimates and state demographer releases. Utilization rates are drawn from HCUP State Inpatient Databases or their state equivalents, stratified by age cohort, because rural populations skew older and age-adjusted utilization rates diverge materially from statewide averages.
Competitive-supply analysis documents every licensed acute-care, critical access, and rural emergency hospital within the relevant drive-time radius, using state licensure registries and CMS Provider of Services files. Planned capacity changes — closures, conversions, or new certifications — are sourced from state certificate-of-need filings where CON law applies, and from CMS enrollment records where it does not. The result is a supply-and-demand balance built from verifiable public records, not industry estimates.
Every financial model contains dozens of inputs, but for a critical access or rural hospital, a small number of assumptions move the debt-service-coverage ratio far enough to determine whether the project is feasible. Identifying those inputs, stress-testing each one independently, and documenting the basis for the base-case selection is the analytical core of the engagement. The fully linked Excel model allows any reviewer to isolate any single input and observe the coverage response without unlocking or reconstructing the model.
Each lending channel brings a distinct review framework to rural and critical access hospital credits, and the feasibility study must address all three if the financing structure layers programs — which it frequently does, given that USDA Community Facilities guarantees and conventional bank debt often appear in the same capital stack.
For SBA engagements under SOP 50 10 8, the study documents that the 1.15x operating and 1.00x global debt-service-coverage minimums are met on a stabilized basis, with the stabilization period and ramp assumptions explicitly defended. SBA reviewers scrutinize management experience in the CAH designation environment specifically; the study addresses the operator's familiarity with cost-report preparation, Medicare settlement risk, and the administrative requirements that accompany designation.
USDA Community Facilities engagements under 7 CFR Part 5001 require the 7 CFR 5001 factor framework to be addressed directly: repayment ability, collateral, equity, management, and purpose. Rural hospitals are among the most common Community Facilities credits; the agency's review expectations for this asset class include confirmation of public benefit, documentation of the essential-facility rationale, and a realistic assessment of long-term operational sustainability rather than a single-year coverage snapshot. For-profit rural hospital structures are served by the Business & Industry guarantee program, which carries its own underwriting standards and collateral requirements.
Conventional lenders typically require 1.20x coverage and place additional weight on the management team's track record with cost-based reimbursement, the stability of the Medicare cost-report settlement history, and the adequacy of working-capital facilities given the lag between cost-report filing and final settlement.
The engagement begins with a fixed-fee quote delivered within one business day of the initial inquiry. The fee is stated before any work begins and does not change based on the finding; no component is contingent on a favorable conclusion. That structure is not incidental — it is the mechanism that keeps the fiduciary duty running to the lender and the reviewing agency rather than to the borrower who commissioned the study.
Work begins when the data room is complete. For a rural or critical access hospital, a complete data room includes the facility's most recent three years of CMS cost reports (Form 2552), the Medicare settlement history, state licensure documentation, the current or proposed designation letter, historical discharge and emergency-visit logs by service line, the staffing model or term sheets for physician coverage, and any executed or draft USDA, state, or federal grant commitments. Incomplete data rooms are the most common cause of delayed delivery; the engagement team identifies gaps at intake and will not begin the clock until the room is genuinely complete.
Standard delivery is 10 to 15 business days from a complete data room. Rush delivery is available for time-sensitive agency submissions. The completed engagement — bound narrative report, ten-year pro forma, sensitivity and interest-rate stress tables, ratio analysis benchmarked against RMA and IBISWorld data, and the explicit statement of conditions — is published to a secure client portal. The Excel model in the portal remains live: inputs can be changed and the model recalculates in real time, allowing lenders and agency reviewers to run their own stress scenarios without requesting a revised deliverable.
The fee is fixed, quoted within one business day of inquiry, and does not change based on the study's finding. No component is contingent on a favorable conclusion. Because rural and critical access hospital studies involve cost-report analysis, designation documentation, and multi-program reimbursement modeling, the scope — and therefore the fee — is more involved than a standard clinic or outpatient-facility engagement. Contact the firm with project details for a same-day quote.
Standard delivery is 10 to 15 business days from a complete data room. For a critical access hospital engagement, a complete data room includes three years of CMS cost reports, Medicare settlement history, licensure and designation documentation, discharge logs by service line, and staffing or physician-coverage terms. Rush delivery is available for USDA or SBA submission deadlines. The clock does not start until the data room is genuinely complete.
Three factors combine in ways that do not appear in outpatient or clinic underwriting: cost-based reimbursement means revenue is a function of allowable cost rather than a negotiated rate, so cost-report preparation and Medicare settlement risk must be assessed; the 25-bed and average-length-of-stay constraints create a narrow operating band; and rural physician coverage — often dependent on locum-tenens arrangements — is both the largest variable-cost line and the hardest to project with confidence.
Yes. When the capital stack layers a USDA Community Facilities guarantee with conventional bank debt — a common structure for rural hospital replacements — the study is built to satisfy both the 7 CFR 5001 factor framework required by the agency and the lender's own coverage standard, typically 1.20x. The narrative and model address each channel's specific documentation requirements so a single engagement serves both reviewers.
Yes. Rural Emergency Hospital designation, established under the Consolidated Appropriations Act of 2021 and operational from January 2023, carries its own reimbursement structure, bed-elimination requirement, and emergency-service obligations. The study documents the conversion requirements, models reimbursement under the REH facility payment and monthly facility payment structure, and tests sustainability against the service lines the converted facility is permitted to operate.
Projects outside the rural designations — general acute-care facilities, physician-sponsored specialty hospitals, and micro-hospitals in suburban and metropolitan service areas — are underwritten on commercial and Medicare reimbursement rather than cost-based rural payment, and are addressed by the firm’s hospital feasibility study consultant practice.
The finding follows the evidence. If the analysis does not support a feasible determination, the study says so, and the conclusion is not revised under pressure from the borrower or any other party. The fiduciary duty runs to the lender and the reviewing agency. An unfavorable finding may identify the specific assumptions — volume, staffing cost, reimbursement rate — that would need to change for the project to reach coverage minimums, which can inform project redesign.
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Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.