Lead articles by Allan Fine and J. Alex Bacchetti; Donald A. Carlson, Jr.
(Taken from Audrey Kaufman's Editorial)
Hospitals are under tremendous pressure to replace old buildings with more efficient and patient-friendly ones; to expand capacity by renovating or adding buildings; to make huge capital investments in information systems, such as computerized physician order entry and electronic medical records; and to purchase new and improved medical equipment, to name just a few initiatives competing for scarce resources. Healthcare institutions must make these improvements to provide safe and reliable care to their patients; to remain competitive with other organizations; to keep their physicians happy; and, ultimately, to keep their doors open. However, in an environment of rising costs and declining revenue, obtaining the capital to spend on these improvements is a challenge. Where will your hospital get the money? How will you decide which expenditure takes priority? How can you keep borrowing costs down?
Given the complex nature of this topic, Frontiers asked Allan Fine, director, and J. Alex Bacchetti, associate director, of Navigant Consulting, Inc., for advice on how healthcare executives might go about planning for capital expenditures in the current environment of tight money. Just as strategies drive capital planning, they suggest, the existence of a cohesive and comprehensive capital plan—one that aligns with the mission, vision, and strategies of the hospital—drives an organization's ability to think and act strategically.
Once the planning phase is in place, CEOs must understand who the actual investors are, what those investors are looking for, and how best to sell the hospital's strategy to get the money it needs. Donald A. Carlson, Jr., senior managing director of the Capital Markets Group at Ziegler Company, provides some guidance in this arena. It is important, this author tells us, to be able to effectively communicate your strategic and capital plans to the different types of credit constituencies, as that will have an impact on the amount of money your hospital will have access to and how much that money will cost.
Both feature articles provide very useful information for CEOs and other senior leaders as they plan for these huge, and necessary, investments of capital and try to determine where and how to raise the money. Remember, not only is your hospital's viability at stake, but your community's health, economy, and environment are affected by the outcomes of your funding efforts as well. Consider the strategies laid out in this issue of Frontiers as you plan current and future capital projects, educate your community on the challenges of accessing capital, and uphold the mission and vision you strive to achieve every day.