Assuring Not-For-Profit Hospital Competitiveness Through Proper Accounting For The True Cost Of Capital

Abstract

The topic of cost of capital is very important, especially for not-for-profit (NFP) organizations. Since profit maximization or stockholder wealth maximization cannot be their objective, NFP firms must be all the more aware of their costs, including the cost of capital, to sustain and grow the quality and quantity of their services to their consumers. Yet, research into this topic has been lagging. This paper adapts and enhances an existing methodology and illustrates how a non-profit hospital’s cost of capital can be estimated.