Option Appraisal in the Uk National Health Service

Charging for Capital in the National Health Service in Scotland

“…Although formal compliance with option appraisal procedures seems to have been high, a widely held view is that the existence of 'financially free' capital notwithstanding appraisal procedures using the Test Discount Rate as a shadow discount rateled to a bias in favour of new build rather than a less glamorous adaptation of the existing capital stock (Mooney and Henderson, 1986;and Ferguson and Lapsley, 1988). Within the internal market, the new emphasis upon the financial profitability of both DMUs and HTs will create a tension between the cost-benefit criterion of option appraisal and the financial appraisal made essential by the profitability criteria of the internal market.…”