PubMed · 10132313
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K Pallarito. 1994-03-14. Reform, bond default link seen.. https://pubmed.ncbi.nlm.nih.gov/10132313/
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The acquisition of expensive equipment such as picture archiving and communication systems (PACS) becomes increasingly difficult as capital budgets become tighter. Traditional ownership financing options in the form of direct purchase or financing (loan) have several limitations including technology obsolescence, higher fixed pricing, limited options for equipment disposal, and the need to tie up valuable capital. Alternative financing options, in the form of conventional lease and risk sharing arrangements, offer several theoretical advantages including technology obsolescence protection in the form of built-in upgrades, preservation of borrowing power, multiple end-of-term options, and payment flexibility (which can be directly tied to realized productivity and operational efficiency gains). These options are discussed, with emphasis on the acquisition of PACS.
The advent of managed care has unleashed market forces on the health care system. One result of these new pressures is a shift from nonprofit to Wall Street-based financing. This report quantifies these trends by comparing health organizations' financial structures in the 1980s and now. The reasons behind this shift and the function of the stock market are examined. A review of Wall Street's key financial measures confirms that health care has shifted to the stock market as its principal means of financing. The stock market works by assigning a current price to a company's stock based on estimates for future earnings. Thus, companies desire predictability in their costs, revenues, and profits. Plastic surgeons can master this system by meeting the challenges imposed by Wall Street financing. Important steps include continuously measuring costs and outcomes of procedures, demanding cost data from hospitals and payers, using these data to improve costs and outcomes, and taking advantage of the system's openness to innovation and easier access to capital. As they seek to protect their role as medical decision makers under the new free-market system, plastic surgeons can benefit from understanding the mechanisms of the stock market.
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