Managing the strategic capital cycle.Healthc Financ Manage. 1997 Dec; 51(12):52-5.HF
A healthcare organization's financial strategy should be defined within the context of the capital cycle and provide for the management of three critical components that will ensure the expansion and renewal of capital capacity--the design and implementation of the financial plan, the design and implementation of an appropriate capital structure, and a means to strategically utilize capital and reinvest it in the organization. The capital cycle comprises two parts--strategic planning and implementation, and the development of the support infrastructure that includes financial planning, capital structure, and capital allocation. The financial plan positions an organization within an area of financial equilibrium and defines its organizational capabilities. The financial infrastructure gives integrity and momentum to the capital cycle. Capital structure addresses critical funding and financing questions and is best defined as the combination of debt and equity that funds the strategic plan. In regard to capital allocation, healthcare organizations should follow a corporate "best practices" approach for such areas as financial objectives and policies, project review, and the capital expenditures approval process.