ABSTRACT
This chapter focuses on the policy issues that emanate from decisions about the uses of capital in the health care system. Capital, in health care, refers to the money used to acquire land, plant, and equipment. The weakness of the equity markets as a long-term method for capital formation is the threat that the appearance of a bearish market would drive down stock prices and thus limit the amount of capital that could be raised. Capital demands for ambulatory services are considerably lower than for other modalities because there are no uniform standards for building and construction of ambulatory care facilities and because the tendency has been toward smaller rather than larger facilities. In the nonprofit sector, capital costs have historically been excluded from prices because capital was supplied through philanthropy or government grants. Capital has become a subject of increasing importance in decisions regarding the future of the health care system.
