Hospitals uphold plans for equipment spending

September 25, 1991

Hospital equipment purchases may be hurt less by the revampingof Medicare capital reimbursement (SCAN 9/11/91) than are hospitalcapital expenditures for real property. In a survey of 647 hospital CFOs conducted by The LINC Group,a Chicago medical

Hospital equipment purchases may be hurt less by the revampingof Medicare capital reimbursement (SCAN 9/11/91) than are hospitalcapital expenditures for real property.

In a survey of 647 hospital CFOs conducted by The LINC Group,a Chicago medical financial services firm, 72.3% of the CFOs questionedexpect to increase expenditures for equipment (see graphs). Fewerthan half (47.5%) anticipate greater capital expenditures on property.

"The large number of hospitals electing to increase theirinvestment in equipment is significant in light of the currentdebate over its cost," said Martin E. Zimmerman, LINC chairman."Given the choice, hospital administrators clearly believetechnology to be a useful and productive investment of their resources."

Hospital CFOs are experiencing a stabilization of financingsources for capital expenditures. They are optimistic about theirability to finance the health-care services of their institutions,the survey said.

The hospital financial officers appear less likely than inpast years to use new debt to finance facility construction andequipment-based services. Given the choice, they would preferto use cash reserves for financing these capital expenditures.

Only about a third of the survey respondents believe that Medicarereimbursement changes would have a substantial impact on theircapital investments. The reaction was the same for both facilitiesand equipment investment. About 63% of the CFOs surveyed see littleor no impact on these capital investments. They apparently havefaith that the Medicare changes will be revenue-neutral as promised,LINC said.