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Health systems agencies and state health planning and development agencies; certificate of need reviews: Health Resources Administration. Notice regarding adjustment of the expenditure minimum for capital expenditures and the expenditure minimum for annual operating costs.

This notice provides necessary information for each State which chooses to adjust the capital expenditure and annual operating cost expenditure minimums that are used to determine whether proposals are subject to review under a State's certificate of need program. The notice also provides guidance to assist a State Health Planning and Development Agency (State Agency) in determining the exact minimum dollar figure it will use and in seeking further information.

Capital Expenditures↗

Health system agencies and state health planning development agencies; certificate of need reviews--HRSA. Notice regarding adjustment of the expenditure minimum for capital expenditures and the expenditure minimum for annual operating costs.

This notice provides necessary information for each State which chooses to adjust the capital expenditure and annual operating cost expenditure minimums that are used to determine whether proposals are subject to review under a State's certificate of need program. The notice also provides guidance to assist a State Health Planning and Development Agency (State Agency) in determining the exact minimum dollar figure it will use and in seeking further information.

Capital Expenditures↗

Health systems agencies and state health planning and development agencies; certificate of need reviews--Health Resources and Services Administration. Notice regarding adjustment of the expenditure minimum for capital expenditures and the expenditure minimum for annual operating costs.

This notice provides necessary information for each State which chooses to adjust the capital expenditure and annual operating cost expenditure minimums that are used to determine whether proposals are subject to review under a State's certificate of need program. The notice also provides guidance to assist a State Health Planning and Development Agency (State Agency) in determining the exact minimum dollar figure it will use and in seeking further information.

Certificate of Need↗

Methods for developing relative need criteria to accompany a health care capital expenditure limit.

In recent years capital spending in the health care industry has escalated tremendously, and most forecasters agree that needs will increase at an even faster rate throughout the 1990s. As a result of this trend, there is a dire need to develop effective and equitable controls on capital spending in health care. One of the capital payment options under consideration is the establishment of a lid on capital expenditures and the concomitant allocation of capital to health care providers whose applications are the most meritorious. The purpose of this article is to present some ideas and methods for the development of a relative need system to accompany a capital expenditure limit and to supplement and expand the absolute need determinations of the typical CON process.

Capital Expenditures↗

Capital expenditures and the availability of funds.

Data on capital expenditures and the availability of funds assembled from the annual financial and service records of 42 short-term voluntary hospitals in New York City over two decades were used to analyze the behavior of annual capital expenditures on building and equipment assets. Desired expenditures on capital as a factor of production are viewed as being the result of changes in anticipated output and of the substitution of capital for labor. Actual capital expenditures in each year also reflect the availability of flows of nonoperating revenues and the completion of capital programs initiated in previous years. Nonoperating revenues include philanthropy and earnings on financial assets as principal sources. A monetary revenue series, adjusted for changes in hospital charges, was used to measure output and thus to seperate the effects of demand for hospital services and supply of funds on investment behavior. The data were approached as annual aggregates for 42 hospitals over the years 1946-1966 and as annual hospital averages for teaching and nonteaching hospitals over the same period. In both approaches four causal factors-output, substitution, the flow of nonoperating revenues, and a distributed lag-explained about 95 per cent of the sample variance of capital expenditures. Allowing for available funds reduced the average time required for 95 per cent completion of a capital adjustment from 7 to 3 years. Responsiveness of hospitals to these economic variables suggests that socially desired investment can be attained by (a) "monetizing" needs of groups now underserved; (b) improving availability of funds if used for acceptable public purposes; and (c) including consumers in determining institutional and regional priorities.

Charities↗

Using an affordability analysis to budget capital expenditures.

A healthcare organization or system often needs to make capital expenditures to expand or renovate its facilities or to finance other important projects. It may be difficult, however, for an organization to gauge how much of its resources it can afford to commit to capital projects. To help the organization evaluate the feasibility of a capital expenditure, an analysis of financial resources should first be conducted. Using an actual healthcare system whose name has been changed to protect its identity, this article outlines how healthcare financial managers can perform an affordability analysis, based on the debt-to-capital ratio or debt service coverage, to determine the amount of resources to allocate for future capital expenditures.

Budgets↗

State rate review and the relationship between capital expenditures and operating costs.

It is commonly assumed that an increase in capital expenditures leads to increased operating costs and a subsequent increase in rates, and thus that state rate review systems must incorporate certificate-of-need type controls over capital expenditures. The results of this study indicate that in those states with comprehensive rate review systems, increased capital expenditures may not lead to higher operating costs and rates; rather, increased wage rates are reflected in higher operating costs and rates. This pass-through of wages, and not capital costs, may have important policy implications.

Capital Expenditures↗

Population growth, human capital expenditures and economic growth: a macroeconometric analysis.

"The paper presents an econometrically estimated model where economic and demographic variables are determined simultaneously. It is used to quantify the importance of human capital expenditures in socioeconomic and demographic development as well as analyze the effects of rapid population growth on human capital expenditures. The simulation results indicate that human capital expenditures are important determinants of economic development, have appreciable negative effects on both fertility and infant mortality, hence, have negligible net effects on population in human capital expenditures per capita which implies a deteriorating quality of human capital."

Demography↗

Limitation on federal participation for capital expenditures--PHS. Notice of proposed rulemaking.

Section 1122 of the Social Security Act, "Limitation on Federal Participation for Capital Expenditures," establishes under which the Secretary may deny Federal reimbursement under titles XVIII and XIX of the Act for expenses related to capital expenditures by or on behalf of health care facilities (1) which the health planning agency designated for a State has found to be inconsistent with standards, criteria, or plans developed under the Public Health Service Act, or (2) for which the designated planning agency was not provided notification as required. These proposed regulations include changes in the regulations now codified at 42 CFR Part 100 based on (1) the proposed amendments to the regulations published in the Federal Register on March 19, 1976, and comments submitted in response to that Notice, (2) the amendments to Title XV of the Public Health Service Act enacted by the Health Planning and Resources Development Amendments of 1979 (Pub. L. 96-79), the Health Programs Extension Act of 1980 (Pub. L. 96-538), and the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35), and (3) the amendments to section 1122 enacted by the Health Maintenance Organization Amendments of 1978 (Pub. L. 95-559), the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35), and the Social Security Amendments of 1983 (Pub. L. 98-21). Interested persons are invited to submit written comments and suggestions concerning this Notice of Proposed Rulemaking (NPRM).

Capital Expenditures↗

Removal of obsolete regulations on limitation on federal participation for capital expenditures under Section 1122 of the Social Security Act--HCFA. Final rule.

This rule removes obsolete regulations governing the section 1122 capital expenditures review program. With the repeal of the comprehensive health planning authority, Title XV of the Public Health Service (PHS) Act, no funds were appropriated to support State capital expenditure review activities, or to administer the program.

Capital Expenditures↗

Capital expenditure planning: the value of information to hospitals.

This article examines some of the costs caused by the uncertainty created by competition among hospitals, especially those costs reflected in capital expenditure planning. A proposal is developed for a computer-based capital budgeting system that would allow hospitals to share enough information about their future capital expenditure plans to reduce the major costs of competition-induced uncertainty without publicly disclosing their future intentions. The benefits of such a system can be measured as the expected value of complete information. An illustrative example is provided.

Capital Expenditures↗

The capital expenditure process for the health care supervisor.

Competition for health care capital dollars has increased as third-party and government reimbursement decreases, patient volume decreases, and alternative services increase. Given this rationing situation, it is more important than ever that the health care supervisor carefully document and present a capital expenditure request. This request should outline skillfully the benefits and costs of undertaking a new service or replacing an old asset. A supervisor who can quantify the costs and benefits of a project and utilize one of the four common capital budgeting techniques: payback period, net present value, profitability index, or internal rate of return, will certainly be taking a step in the right direction for ensuring a serious evaluation of his or her proposal. This article attempts to explain this process using both narrative and quantitative examples.

Budgets↗

Alternative method of funding hospital capital expenditures.

This article presents a model that demonstrates how a hospital can form a strategic partnership with a vendor to use the vendor's previous knowledge, experience, and strategic alliances to fund capital expenditures and implement cost savings programs for the hospital, with no capital outlay or risk to the hospital. The vendor assumes full financial risk for the success of the program. In exchange for the vendor's full risk, the hospital shares in the savings with the vendor.

Capital Expenditures↗