Charging for capital in the National Health Service in Scotland

Heald, D. and Scott, D. A. (1995) Charging for capital in the National Health Service in Scotland. Financial Accountability and Management, 11(1), pp. 57-74. (doi: 10.1111/j.1468-0408.1995.tb00396.x)

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This article evaluates the capital charging system implemented in the National Health Service in Scotland, probing its intellectual coherence and implementa- tion. Asset valuations may be too high because of the decision to value at Depreciated Replacement Cost (even when higher than market value) and the decision to disregard the issues raised by Modern Equivalent Asset methodology. The incentive effects of capital charges are complex: historically good maintenance may be penalised, and economic and financial appraisal of new projects may give conflicting signals. Capital charging differently affects Hospital Trusts and Directly Managed Units. Moreover, the interaction of capital charging and the public corporation status of Hospital Trusts inflates gross public expenditure on health.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Heald, Professor David
Authors: Heald, D., and Scott, D. A.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Financial Accountability and Management
Publisher:Blackwell Publishing
ISSN (Online):1468-0408
Published Online:28 June 2008

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