Medicare reimbursement of financial transactions: do present policies promote efficiency?

The Secretary of Health and Human Services denies Medicare reimbursement for certain indirect costs associated with health care delivery. This Note reviews arguments supporting and opposing reimbursement of costs that providers incur in three common financial transactions: the use of equity capital, acquisition of providers, and loan financing. The Note considers the Secretary's regulations in light of the congressional mandate to encourage efficient delivery of health care and concludes that current reimbursement policy promotes inefficiency.