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CHARGING FOR CAPITAL IN THE NATIONAL HEALTH SERVICE IN SCOTLAND
Author(s) -
Heald David,
Scott David A.
Publication year - 1995
Publication title -
financial accountability and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.661
H-Index - 44
eISSN - 1468-0408
pISSN - 0267-4424
DOI - 10.1111/j.1468-0408.1995.tb00396.x
Subject(s) - business , capital (architecture) , national capital , service (business) , public administration , political science , geography , accounting , national accounts , marketing , archaeology
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.