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Capital Budgeting in Health Organizations

Prior to beginning work on this discussion, please read Chapters 16, 17, 22, 23, 27 and 28 in your course textbook, the Capital Budgeting in Health Organizations: Application of the Multicriteria Method Promethee V1, Capital Budgeting, and The Increasing Importance of Strategic Capital Planning (PDF Version), and Overview of Capital Budgeting articles, as well as the Capital Budgeting web page.

The most obvious cost in a capital budget is the actual cost of the capital expenditure item. We must also consider other costs that will be incurred when we make the capital expenditure (purchase). These costs are important to include because they can be the difference between a successful implementation of the capital expenditure item and staying on budget.

After reviewing the textbook readings,

Provide an example of a healthcare capital expenditure.
Explain the rationale behind the purpose of a capital expenditure budget.
Include two other cost considerations and explain their inclusion in your capital budget plan.
For example, if you are installing an Electronic Medical Records (EMR), you must include future cost for maintenance, software updates, new computers, etc. These are the hidden costs of operation often not considered in a capital budget.