Capital investment strategies in health care systems.
Capital investment decisions are among the most important decisions made by firms. They determine the firm's capacity for providing services and commit the firm's cash for an extended period of time. Interviews with chief financial officers of leading health care systems reveal capital investment strategies that generally follow the recommendations of modern finance theory. Still, there is substantial variation in capital budgeting techniques, methods of risk adjustment, and the importance of qualitative considerations in investment decision making. There is also variation in delegation of investment decision making to operating units and methods of performance evaluation. Health care systems face the same challenges as other organizations in developing and implementing capital investment strategies that use consistent methods for evaluation of projects that have inconsistent aims and outcomes.
Reiter
K L
KL
Department of Health Management and Policy, School of Public Health, The University of Michigan, Ann Arbor, Michigan 48109-2029, USA. kreiter@umich.edu
Smith
D G
DG
Wheeler
J R
JR
Rivenson
H L
HL
D002017:Budgets; D002202:Capital Financing; D003659:Decision Making, Organizational; D019033:Delivery of Health Care, Integrated / Q000191:economics*; D005377:Financial Management, Hospital / Q000379:methods*; D006740:Hospital Administrators; D006752:Hospital Planning / Q000191:economics; D007407:Interviews as Topic; D007449:Investments / Q000191:economics*; D014481:United States