| Course | AMT2 Service Line Development |
|---|---|
| Task | Task 1 |
| Paper type | Facility build, buy or lease analysis |
| Length | About 1,000 words, 3 pages |
| Format | APA 7 |
| School | Western Governors University (WGU) |
| Program | BS Healthcare Administration |
| Updated | September 2026 |
Free sample paper for AMT2 Task 1
Build on Campus, Buy by the Highway or Lease in the Shopping Center? A Facility Analysis for a Composite Hospital's Outpatient Heart and Vascular Center
Student Name
Leavitt School of Health, Western Governors University
AMT2: Service Line Development, Task 1
Course Instructor
Month Day, Year
Build on Campus, Buy by the Highway or Lease in the Shopping Center? A Facility Analysis for a Composite Hospital's Outpatient Heart and Vascular Center
The Service Line and Its Space Needs
Summit Valley Regional Medical Center, a composite 260-bed hospital, provides cardiac catheterization, cardiac surgery and inpatient cardiology on its main campus, but its outpatient cardiology clinics, echocardiography, stress testing, vascular ultrasound and cardiac rehabilitation are scattered across three older buildings. Most population growth in its service area is 12 miles south, along the interstate. The board has approved a new outpatient Heart and Vascular Center and asked whether the hospital should build, buy or lease the space.
The center needs about 22,000 square feet: 24 exam rooms for cardiologists and vascular surgeons, rooms for echocardiography, nuclear and exercise stress testing and vascular ultrasound, a cardiac rehabilitation gym and support space. Invasive procedures will stay on the main campus, because the state requires a certificate of need to open a new catheterization laboratory, and the existing laboratories have capacity. The trend in cardiovascular care supports an outpatient focus: from 2009 to 2017, the share of elective percutaneous coronary intervention patients sent home the same day rose from 4.5% to 28.6% without worse 30-day mortality or rehospitalization (Bradley et al., 2021), and more of the care before and after such procedures now happens in clinics.
Option 1: Build on the Main Campus
The hospital owns a parcel next to its parking garage. A new 24,000-square-foot building would cost about $15.6 million at current construction costs and take about 30 months to design, permit and build. The hospital would have full control of the design, could add floors later and would own a lasting asset. The disadvantages are time, cost and location: the campus is on the north side of the service area, away from the growth corridor, and parking is already tight.
Option 2: Buy an Existing Building
A vacant 20,000-square-foot medical office building near the southern interstate exit is for sale for $6.2 million. Renovation, including shielding for nuclear imaging, a rehabilitation gym and new heating and cooling equipment, would cost about $4.8 million, for a total of $11.0 million, and the center could open in about 14 months. The site is in the growth corridor, has ample parking and allows for a small addition. The building dates from 1998, so the roof and mechanical systems will need attention within ten years, and the hospital would carry the risk of any hidden defects.
Option 3: Lease Space
A retail center near the same interchange offers 22,000 square feet on a ten-year lease at $32 per square foot a year, about $704,000 in the first year, with 3% annual increases. The hospital would pay about $2.8 million for tenant improvements after the landlord's allowance, and the center could open in nine months. Leasing requires the least capital and is the fastest route. However, the hospital would not control the building, would face renegotiation or relocation after ten years and would have no asset at the end. Under current lease accounting rules, a long-term lease is also recorded on the balance sheet as a liability, so leasing does not keep the commitment off the hospital's books.
Comparing the Options
The table compares the options over ten years. Operating costs include utilities, maintenance and property costs the hospital would bear under each option.
| Factor | Build on campus | Buy existing building | Lease retail space |
|---|---|---|---|
| Up-front cost | $15.6 million | $11.0 million | $2.8 million |
| Time to open | About 30 months | About 14 months | About 9 months |
| Ten-year cash outlay | About $20.1 million | About $16.2 million | About $13.9 million |
| Asset at year ten | New building, estimated value $12 million | Building, estimated value $7 million | None |
| Location | North campus, away from growth | Growth corridor | Growth corridor |
| Control and expansion | Full | Full; small addition possible | Limited; subject to landlord |
| Main risks | Delay, cost overruns, weak location | Hidden building defects, capital repairs | Rent increases, relocation at lease end |
After subtracting the estimated value of the asset remaining at year ten, the net cost of buying, about $9.2 million, is close to the net cost of building, about $8.1 million, and below the $13.9 million of leasing with nothing left at the end. But the building option opens 16 months later than buying and in the wrong part of the market, and every month of delay is a month of lost visits in the growth corridor.
Strategic Considerations
Demand is the largest uncertainty. The hospital's forecast assumes that current patients from the south will shift to the new center and that new patients will follow population growth. A competing cardiology group is also considering the corridor. Experience with cardiac services shows the risk of duplication: of 301 new cardiac surgery programs opened in the United States between 1993 and 2004, 42% opened in communities that already had access to cardiac surgery, suggesting competition for shares of a shrinking market (Lucas et al., 2011). An outpatient center is a smaller bet than a surgery program, but the lesson applies: capacity should follow demonstrated demand. Buying a building that can be partly leased to other physicians if volume is slower than expected reduces that risk.
Cardiovascular disease will keep demand high. Heart disease remains the leading cause of death in the United States (Martin et al., 2024), and the service area is aging. The need is not in doubt; the uncertainty is how much of it Summit Valley will capture.
Recommendation
Summit Valley should buy the existing medical office building near the southern interchange. It puts the center where the growth is, opens more than a year sooner than building, gives the hospital control and an asset, and costs substantially less over ten years than leasing. Before closing the purchase, the hospital should commission a full building inspection and set aside a reserve of about $900,000 for roof and mechanical replacement within ten years. If the inspection finds major defects, leasing the retail space for a five-year initial term would be the fallback, preserving speed while the hospital tests demand.
References
Bradley, S. M., Kaltenbach, L. A., Xiang, K., Amin, A. P., Hess, P. L., Maddox, T. M., Poulose, A., Brilakis, E. S., Sorajja, P., Ho, P. M., & Rao, S. V. (2021). Trends in use and outcomes of same-day discharge following elective percutaneous coronary intervention. JACC: Cardiovascular Interventions, 14(15), 1655-1666. https://doi.org/10.1016/j.jcin.2021.05.043
Lucas, F. L., Siewers, A., Goodman, D. C., Wang, D., & Wennberg, D. E. (2011). New cardiac surgery programs established from 1993 to 2004 led to little increased access, substantial duplication of services. Health Affairs, 30(8), 1569-1574. https://doi.org/10.1377/hlthaff.2010.0210
Martin, S. S., Aday, A. W., Almarzooq, Z. I., Anderson, C. A. M., Arora, P., Avery, C. L., Baker-Smith, C. M., Barone Gibbs, B., Beaton, A. Z., Boehme, A. K., Commodore-Mensah, Y., Currie, M. E., Elkind, M. S. V., Evenson, K. R., Generoso, G., Heard, D. G., Hiremath, S., Johansen, M. C., Kalani, R., . . . Palaniappan, L. P. (2024). 2024 heart disease and stroke statistics: A report of US and global data from the American Heart Association. Circulation, 149(8), e347-e913. https://doi.org/10.1161/CIR.0000000000001209
What the AMT2 Task 1 instructions ask
The first AMT2 task asks you to decide how a healthcare organization should obtain space for a service line. You will usually describe the service and its space needs, analyze building, buying and leasing, compare costs over a common period, consider strategic factors such as location and flexibility and make a recommendation. Figures may be illustrative but should be internally consistent. Evaluators look for each option described with its costs and timeline, a comparison over the same time horizon, attention to the value of owned assets at the end of the period and strategic factors that could outweigh cost. A recommendation based on the lowest upfront cost alone will not meet the analysis aspects. The service line you choose here carries into the later tasks, so describe it with care.
How this AMT2 Task 1 example is built
The analysis begins with the service line, current volumes and the space it needs. Each option has its own section with size, price or rent, timeline to opening and location. A ten-year comparison table sets purchase or construction, rent and operating costs side by side. A note explains the adjustment for asset value remaining at year ten, which changes the ranking. The strategic section considers where patients live, demand uncertainty, flexibility if volumes fall short and the time each option takes. The recommendation chooses the option that balances cost and access and names the conditions that would change it. Every figure in the text matches the table, which evaluators check.
Where the AMT2 Task 1 rubric puts the marks
AMT2 Task 1 aspects are rated competent, approaching competence or not evident. A needs aspect checks that the service line's requirements are described. Option aspects reward each alternative explained with costs and timing. A comparison aspect looks for a common time horizon and consistent figures. A strategic aspect asks for factors beyond cost. A recommendation aspect wants a choice justified by the analysis. Evaluators check arithmetic and notice when residual asset value and flexibility are considered, since these often decide facility choices. They also look for assumptions stated openly, such as annual rent increases and construction timelines, so the comparison can be tested. A recommendation that follows from both the numbers and the strategic factors, rather than from either alone, reads as the strongest work.
AMT2 Task 1 help: what sends it back
Facility analyses come back most often because options are compared on different time frames. Use the same period for all three. Second, ownership's residual value is ignored. Subtract what the building is worth at the end. Third, strategic factors are missing. Consider where patients live and how quickly each option opens. Fourth, assumptions are hidden. State rent increases, construction costs and discount assumptions. Finally, recommend with conditions. Saying what would change the choice, such as lower demand, shows judgment. Present the comparison in a table, because a reader should be able to see all three options side by side in seconds. Keep narrative and table consistent, since a mismatch between them is one of the easiest errors for an evaluator to spot.
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AMT2 Task 1 questions, answered
Should AMT2 Task 1 include costs?
Yes. Compare each option's costs over the same period, including operating costs and any remaining asset value. The sample uses a ten-year comparison table. State the assumptions behind each figure.
Is leasing always cheaper in AMT2?
No. Leasing often costs less upfront, but ownership can cost less over time once the building's remaining value is counted. The sample finds buying close to leasing on net cost.
What strategic factors matter in AMT2 Task 1?
Location relative to patients, time to open, flexibility if demand changes and control over the space. The sample weighs each before recommending purchase. These factors can outweigh small cost differences.
Is the AMT2 hospital in the sample real?
No. Summit Valley Regional Medical Center and its figures are hypothetical, created to show how the three options are compared. Use your course scenario and consistent figures in your own analysis.
Where can I find a free AMT2 Task 1 sample paper?
This page carries the complete AMT2 Task 1 facility build, buy or lease analysis; notes beside it explain why each part works for AMT2. If your AMT2 case differs, the desk writes a first facility build, buy or lease analysis for your Task 1 at no charge.