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How does Providence’s investment rate compare with other major hospital companies?

The "Cap Ex Ratio" (capital spending divided by depreciation) is the standard measure of investment rates. Depreciation is an accounting estimate of the rate at which companies "use up" their property and equipment. In theory, a Cap Ex Ratio of 1.0 means that a company is replacing assets as fast as they are exhausted. In practice, the average multi-state non-profit hospital system reports a 1.5 Cap Ex ratio, according to an August 2005 report from Moody’s Investors Service. Providence projects a 2.43 ratio Cap Ex Ratio in 2006, meaning that it will spend — in proportion to its depreciation expense — 62% more than the average multi-state non-profit system..