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October 18, 2016

Investing Wisely in Health Care Capital

Author Affiliations
  • 1Li Ka Shing Knowledge Institute, St Michael’s Hospital, Toronto, Ontario, Canada
  • 2Institute of Health Policy Management and Evaluation and Department of Medicine, University of Toronto, Toronto, Ontario, Canada
  • 3Institute of Health Policy Management and Evaluation, Dalla Lana School of Public Health, University of Toronto, Toronto, Ontario, Canada
  • 4Department of Medicine, Mount Sinai Hospital and University Health Network, Toronto, Ontario, Canada

Copyright 2016 American Medical Association. All Rights Reserved. Applicable FARS/DFARS Restrictions Apply to Government Use.

JAMA. 2016;316(15):1543-1544. doi:10.1001/jama.2016.10605

Health care expenditures increase for 2 reasons: patients consume more services, and the cost of those services increases. Costs of services have 2 components: operating costs and capital costs. Capital represents the total pool of funds expended by a health care organization to build, acquire, or upgrade physical assets such as property, buildings, technology, or equipment. In 2014, US health care capital expenditures exceeded the Organisation for Economic Co-operation and Development average, totaling US $88.8 billion, about 3% of US $3 trillion spent on all health care.1,2 In the same year, Canada spent CAD $8.8 billion on health care capital, representing 4.1% of the CAD $214.9 billion spent on all health care, compared with 15% spent on physician services and 16% on drugs.3 Perhaps because they are numerically smaller, capital expenditures, while clearly noticeable, usually generate less controversy compared with the well-known public debate about drug prices or physician and hospital fees.