ROI (return on investment): its role in voluntary hospital planning

Return on investment is the primary financial criterion used to evaluate the desirability of capital investment in investor-owned firms. Voluntary health care firms need to examine more carefully their return-on-investment levels. The potential loss of capital cost payment in the Medicare program and the removal of tax-exempt financing would raise the effective cost of capital to voluntary health care firms significantly. Many health care providers might find that they are no longer going concerns if capital costs increase much more.