Cost of capital to the hospital sector.

This paper provides estimates of the cost of equity and debt capital to for-profit and non-profit hospitals in the U.S. for the years 1972-83. The cost of equity is estimated using, alternatively, the Capital Asset Pricing Model and Arbitrage Pricing Theory. We find that the cost of equity capital, using either model, substantially exceeded anticipated inflation. The cost of debt capital was much lower. Accounting for the corporate tax shield on debt and capital paybacks by cost-based insurers lowered the net cost of capital to hospitals.

Capital investment for the future of biomedical research: a university chief financial officer's view.

The author explores the subject of capital needs in university biomedical research. Three main topics are covered: the universities' need for capital (which is great and growing fast); the sources of capital for universities (private donations, state and federal governments, institutional funds, and debt); and a review of federal policy, to determine whether the federal government is part of the problem of meeting universities' capital needs or part of the solution. For each topic, important assumptions, questions, and possible future trends and dangers are reviewed. The author calls for the university research community to face the difficult issues he has raised and consolidate their thinking in order to avoid potential dangers and to ensure the health of university science into the 21st century.

Estimating replacement costs for hospital equipment.

This paper presents a methodology for predicting future replacement costs of hospital capital equipment. The methodology is applied to the equipment inventory of a large Canadian teaching hospital. The authors used forecasted Producer Price Indexes for several equipment categories, and applied them to the estimated equipment replacement needs. The Canadian Management Information System schedule and the American Hospital Association schedule were used to determine the estimates, which varied considerably between the two schedules. However, the test case demonstrated that such estimates can help hospitals to document capital funding needs in relation to available funds.

Act now to maximize Medicare payments for capital.

Anticipating a change in the way Medicare pays for capital costs, healthcare organizations should evaluate their capital expenditure plans. To maximize payments under the current system, they should create an equipment acquisition plan that brings the greatest capital costs during the equipment's early life. They then should determine a cost allocation method that assigns the greatest allowable capital costs to Medicare.

Is nuclear medicine cost-effective?

Clearly, there is currently no consensus on the cost-effectiveness of nuclear medicine--or in fact any other aspect of medicine. It is hoped that common sense prevails in clinical medicine today. An appropriate case history and physical examination may negate the need for any additional investigation. From the perspective of the capital cost of equipment and supply costs, ultrasound is clearly the most cost-effective diagnostic imaging modality. But while it is useful, it does not always provide definitive answers, and other modalities must be used to arrive at a diagnosis. In comparison, the capital cost of general radiology equipment and nuclear medicine equipment is relatively equal. Radiology has more operating costs per case than nuclear medicine and requires a lower staffing component per given volume of examinations. In any given diagnostic imaging procedure, the practitioner and imagist must maintain a dialogue to ascertain the appropriateness of the study and to use the available resources in the most effective manner. This is even more imperative when CT scanning and MRI are included in the equation. The development of an investigative protocol that makes the most efficient use of the various imaging modalities without compromising the quality of care makes sense for the patient, the physician and the insurance provider. It is unreasonable to expect the physician to be aware of the optimal protocol for the diagnostic workup of every patient. The guidance of the imaging department is required to maximize the efficient use of the available facilities. A critical and exhaustive appraisal of the medical literature may be required to determine the optimal diagnostic protocol.(ABSTRACT TRUNCATED AT 250 WORDS)