Influences on the use of capital by public hospitals

This paper examines key influences on the volume of capital employed by public hospitals. Empirical models are constructed and analysed separately for total capital employed and for plant and equipment only, using data from 68 Victorian hospitals. Such data provide an empirical base to guide government decisions on funding capital expenditure in hospitals. The analysis finds that the proportion of hospital expenditure devoted to outpatients and teaching, and the proportion of funding derived from government all influence the level of capital utilised per inpatient. The model provided a reasonable fit for plant and equipment, but much improved data coverage and consistent valuation of land and buildings are required to adequately explain influences on total capital.