Cost of capital to the hospital sector.

Published

Journal Article

This paper provides estimates of the cost of equity and debt capital to for-profit and non-profit hospitals in the U.S. for the years 1972-83. The cost of equity is estimated using, alternatively, the Capital Asset Pricing Model and Arbitrage Pricing Theory. We find that the cost of equity capital, using either model, substantially exceeded anticipated inflation. The cost of debt capital was much lower. Accounting for the corporate tax shield on debt and capital paybacks by cost-based insurers lowered the net cost of capital to hospitals.

Full Text

Duke Authors

Cited Authors

  • Sloan, FA; Valvona, J; Hassan, M; Morrisey, MA

Published Date

  • March 1988

Published In

Volume / Issue

  • 7 / 1

Start / End Page

  • 25 - 45

PubMed ID

  • 10302653

Pubmed Central ID

  • 10302653

Electronic International Standard Serial Number (EISSN)

  • 1879-1646

International Standard Serial Number (ISSN)

  • 0167-6296

Digital Object Identifier (DOI)

  • 10.1016/0167-6296(88)90003-3

Language

  • eng