Capital Investment

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Capital investment

Activity in this area begins with a basic question: Given multi-million Euro investments in new hospitals and health facilities, why has so little been done to address the problem of recognition of the economic value and impact of (health) capital assets in regional and local economies?

Added to this, we might also include the call in The Bilbao Agenda to widen the definition of value to include some form of 'value for money' formula that embraces recyclable benefits such as environmental protection, social cohesion, enhancing local competitiveness and promoting community regeneration. This means - moving from cost control and cost savings to cost effectiveness as a key determinant in policy and investment decisions.

 

Current situation

Analysis undertaken by the European Health Property Network (who provide external expertise for this knowledge theme) and the WHO Observatory on Health suggests the relevant tools and techniques for evaluation of return on healthcare investment - as part of a wider value for money appraisal - have not been adequately developed. However is a symptom. The underlying cause is more fundamental:

  • Most health systems for the past decades have been dominated by performance objectives and strategies targeted at cost efficiency (lowest cost value achievable tempered by output standards and quality safeguards). Put simply in capital terms, the conventional competitive approach to procurement has a value system grounded almost wholly in the cost-containment principle, demonstrably generated by government need to cap the ever-rising costs of healthcare.
  • Even when cost effectiveness (the return on investment principle) replaces cost efficiency as the rationale for decision making there has been little consensus on what constitutes 'return' value. Each of the key players in hospital and healthcare projects e.g. politicians, clinicians, chief executives, government strategists, treasury officials and the public, have their own value system; not all are mutually inclusive.

Economic and broad social values have rarely been acknowledged as prime-values even though these wider determinants have a profound influence on health status. Yet there are some signs this attitude may be changing. As a result, historically, there has been little incentive to develop systems and techniques that will enable effective connections to be made between capital models and integrated regional policy.

Despite considerable investments in health facilities worldwide, little systematic evidence is available on how to plan, design and build new facilities that maximize health gain and ensure that services are responsive to the legitimate expectations of users. A current book from the European Observatory on Health Systems and Policies on 'Investing in hospitals of the future' brings together current knowledge about key dimensions of capital investment in the health sector.

 

  Name Size
Icon HCN Report 2- How the health sector can contribute to regional development: the role of affordable capital investment 879.8 KB
Icon Policy recommendations on health sector capital investment - The Graz Agenda 237.8 KB

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