Freezing capital expenditure seems risky to me. ROI would need to taken into consideration. Staying competitive in the market with the technology that the consumer expects can of course hurt your revenue stream. For example: We implemented digital mamography not simply because the technology was better but our consumers were going elsewhere without the latest technology. As soon as we advertised this was available, we could not keep up with the volume and had to expand our hours. We have implemented sentinel node mapping and Lap banding procedures that while costly to purchase the equipment, will have a return on investment that will benifit us in the long run so we can invest in more capital. Our bond rating has stayed A to AA and our board is happy with this and we are still able to borrow for our 16 million dollar expansion project. Most hospitals need to evaluate the non-revenue generating areas and become more lean in their utilization of their FTE's and productivity. I have worked in large organization and a small critical access one. The critical access hospital has learned to do more with less.

Some organizations with liquidity problems may have to put a freeze on their capital budgets. In many situations money will have to be moved from the capital budget to the annual budget in order to cover the expenses of running the day to day business. Even institutions with ready access to cash are now spending much more time reviewing all new capital purchases. In times of plenty it is not uncommon to make purchases off your wish list but in a recession this becomes much more difficult.

I agree that freezing your capital budget will hurt in the long wrong. Alternative options to purchasing such as lease to buy programs may protect your cash and allow you to remain competitive.

I agree with Laura that freezing your capital expenditures seems rather risky. Given the technological advances that patients expect, falling behind on equipment and technology would seem to suggest to the patient that the HCO isn't capable of providing the best possible care. Of course, this is somewhat perverse when one considers that in some cases, there may not be any change in the diagnosis, treatment, or health outcome of the patient with older technology versus newer technology (imaging technologies, for example).

As Laura mentioned, anything that doesn't generate revenue is fare game becomes a big target at times like this (not that revenue generation should excuse departments from being examined or not). Applying benchmarks across an organization (something we don't do terribly well in Canada) is something that can help to ensure maximum productivity from a minimal number of FTEs.

A capital freeze can be a double edged sword. While it may be imperative in the short term (less than 1 fiscal year) to strengthen cash flow and maintain bond ratings, it can be disastrous in the long term.

If the system in question has a foundation the Board may be able to approach them for some capital funding in the short term.

I really appeciated the discussion on leasing versus capital expenditures. While Capital expenditures may be curtailed, there are other viable options for staying competitive and keeping current with the expected technological advances. By using leasing when appropriate, this can free limited capital funds to be available to support other areas of the organizations mission.