Purchasing new capital equipment, or moving forward with an upgrade is a challenging and risky task. Around the globe, health systems are burdened by increasing costs and a seemingly never ending stream of new technology that requires investment to remain current. In non-U.S. health systems, hospitals receive relatively fixed fees and direct government funding. Equipment must be approved by a governing health authority, and purchases are typically approved to maintain the standard of care, not for that institution to lead the community in innovation. Novel technologies are usually funded by donations, special grants, debt, or through cost offsets in operating budgets. Virtually all large purchases require a business case, and elaborate justifications including value analysis, and sometimes even health economic studies. Increasingly, this is also the case in the U.S.
Now we tackle two important questions:
- How should a manager approach the capital planning process to maximize their chances of approval and implementation?
- What are the critical steps they need to take, and what are the guidelines?
The rest of this guide will illuminate these issues and provide a road map and the best practices in capital project planning.