Capital investment in hospitals is one of the essential steps in marshaling up the necessary infrastructure; equipment and technology that make up the healthcare industry stand. It is important to note that the level of capital investments put in hospitals determines the success of the healthcare industry such that when capital investments in hospitals are reduced, a direct adverse effect is realized in the results of patients' treatment while an increase in hospital capital investment would improve the outcome of patients’ treatment. A majority of hospitals within and outside the United States depend on internal cash flow within the hospital as well as debt from loans to fund their capital investment projects. Sadly, the financial recession of 2008 affected the hospitals to a very substantial effect since it made it impossible to borrow and thus difficult to make capital investments.
Choi (2017) sought to find out how the great recession affected the hospitals in California in terms of operation and capital investments. This, therefore, enables the journal to get to know how vital capital investment is to the Californian hospitals. Specifically, the study investigates the liquidity constraints of hospital capital investments of California hospitals brought about by the great recession. The study was based on an estimate drawn from the manager and custodian of the California State data. From the results obtained from the data planning and development authority, the journal saw evidence of the fact that nonprofit making hospitals who also happen to be public hospitals were a subject of the recession such that they got liquidity constrained throughout the period. The journal further made a comparison between other information and specifically the capital investments of hospitals during the three years of the great recession (2006-2009), and they realized that most of the Californian hospitals resorted to the use of cash flow to expand their respective capital investments.
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Reference
Choi, S. (2017). Hospital Capital Investment During the Great Recession. INQUIRY: The Journal of Health Care Organization, Provision, and Financing , 54 , 0046958017708399
