Hospital Capital Budgeting During a Public Health Crisis

Abstract

This paper seeks to understand the current financial landscape in the context of hospital capital budgeting, as well as provide some guidance on how to navigate the capital markets in times of crisis. The focus is on the general weighted average cost of capital formulation and the relationship of its components: the risk free rate and its relationship with the costs of equity and debt, the cost of debt, and the cost of equity. We provide some practical implications for managing during the current crisis, as well as potential avenues that merit future research.

Keywords: COVID-19, Hospital, cost of capital