Question

{capital financing} Are the ways in which hospitals obtain capital different from the ways in which doctors obtain capital? Why?

Answer 1

NOTE: The question given does not exactly mention about the details or the extent to which the capital financing options needed to be explained. Also the solution is based on my understanding of question "whether the small doctors and big hospitals finance their funding in different ways?"

• Firstly, the hospitals are a bigger network of many doctors and more like an institution, so to obtain funds there are various sources available. Some of them are - 1. Loan financing (through bank loans, Overdraft facilities and also from various financing institutions), 2. Municipal bonds financing, 3. If it is registered as a company raising capital through equity and debt issue, 4. Mortgage insurance in cases of some qualified hospitals, etc.
• On the other hand, for doctors to obtain capital, very few options are available and main source would be a loan through bank or financial institution.
• The major difference between the hospital and doctors would be the size of capital involved. The doctor when setting up a clinic mostly would be a specialist in a particular stream like pediatrician, dermatologist, dentist, general surgeon and so on. Compare that to a hospital which is set up with a bigger motive of catering to many or all kinds of specialists. This sheer size comparison is enough to justify the volume of capital required for doctors and hospitals.
• Moreover from lender's cost benefit analysis viewpoint, it would be more sensible for some lenders to finance a bigger project than an individual one based on factors like sustainability in the longer run, repayment capacity of the recipient, etc.
• Notwithstanding the above, if there is a genuine need of a capital there are venture capitalists out there who are willing to fund the deserved

So, we can note there are obvious differences in the way capital funding occurs for doctors and hospitals.