A capital idea

Abstract

The recap rate offers a useful tool for measuring and projecting required investment in facilities improvement. Although it should not be a stand-alone measurement, it is meaningful as an average over 15 years and more. Commercial hospitals can use the recap rate as part of long-term financial planning by anticipating a cumulative average annual expenditure of about 5% of their PRV. Most hospitals will not spend 5% per year, but can spend 30-50% of PRV every 10-15 years for facilities R&M. TRICARE can measure the change in the difference between its recap rate and the commercial sector over time. Given that TRICARE must attract patients, the recap rate is one measure of comparison between DOD and its competitors in the commercial healthcare sector.