Journal of Healthcare Management - January/February 2016 - (Page 58)

The Capital Budgeting Process of Healthcare Organizations: A Review of Surveys Tarun Mukherjee, PhD, Moffett Chair in Financial Economics and professor of finance, Department of Economics and Finance, University of New Orleans, Louisiana; Naseem Al Rahahleh, PhD, assistant professor of finance, Department of Finance, King Abdulaziz University, Jeddah, Saudi Arabia; and Walter Lane, PhD, associate professor of economics, Department of Economics and Finance, University of New Orleans E X E C U T I V E S U M M A R Y Several surveys have been administered over the last 40 plus years to learn about capital budgeting practices of healthcare organizations. In this report, we analyze and synthesize these surveys in a four-stage framework of the capital budgeting process: identification, development, selections, and post-audit. We examine three issues in particular: (1) efficiency of for-profit hospitals relative to not-for-profit hospitals, (2) capital budgeting practices of the healthcare industry vis-à-vis other industries, and (3) effects of healthcare mergers and acquisitions on capital budgeting decisions. We found indirect evidence that for-profit hospitals exhibited greater efficiency than not-for-profit hospitals in recent years. The acquisition of not-for-profits by forprofits is credited as the primary reason for growth of multihospital systems; these acquisitions may have contributed to the more efficient capital budgeting practices. One unique attribute of healthcare is the dominant role of physicians in almost all aspects of the capital budgeting process. In agreement with some researchers, we conclude that the disproportionate influence of physicians is likely to impede efficient decision making in capital budgeting, especially for nonprofit organizations. For more information about the concepts in this article, contact Dr. Al Rahahleh at nalrahahleh@kau.edu.sa. 58

Table of Contents for the Digital Edition of Journal of Healthcare Management - January/February 2016

Journal of Healthcare Management - January/February 2016
Contents
Interview With Nancy Borkowski, DBA, FACHE, CPA, Professor in the Department of Health Services Administration, University of Alabama at Birmingham
Developing Physician Leaders Through Professional Associations
Understanding Value-Based Incentive Models and Using Performance as a Strategic Advantage
Exploring Business Strategy in Health Information Exchange Organizations
The Effects of Hospital-Level Factors on Patients’ Ratings of Physician Communication
A Review of Tools to Assist Hospitals in Meeting Community Health Assessment and Implementation Strategy Requirements
The Capital Budgeting Process of Healthcare Organizations: A Review of Surveys

Journal of Healthcare Management - January/February 2016