Making the Right Choices for Financing Your Medical Equipment

Healthcare decision makers face continual challenges when it comes to allocating scant recourses. Patients demand the best that medical equipment technology has to offer. But the equipment is expensive. Capital budgets typically fall way short of requests for medical technology. It is therefore critical that all aspects of the equipment purchases and financing be carefully considered before a decision is made.

Equipment to purchase:

Deciding what type of equipment to acquire can be a daunting task in and of itself. Let’s say you are considering the purchase of a CT scanner. The current and most widely-used model costs around $1 million new. You’ve also been approached by a supplier that sells refurnished equipment. His company will sell you a refurbished 16-slice machine for $400,000. You’ve also discovered that a new scanner is being rolled out in six months. Although this machine will be able to detect cancer and other diseases it its early stages, the cost is $1.5 million. What do you do? Will you be able to charge more per scan with the newest technology so that revenues match expenditures? Will you be able to “get by” with the 16-slice for a period of time? These are questions that are at the root of the decision.

Once the decision has been made as to the type of medical equipment to be acquired, the next challenge is to decide what will be the optimal way of financing it. There are many options available, but the most common are borrowing the funds from a lender or leasing the equipment.

Medical Equipment Leasing:

Equipment leases usually run from three to six years and have lower monthly payments than buying the equipment outright and financing it through a lender. That’s because the lessee is paying for the use of the equipment during the term rather than owning it. In addition, leasing offers 100% financing, as there is no down payment required other than the first payment and a security deposit equal to a payment. Since the payments are lower, providers are able to improve their cash flow and are more likely to match revenues with expenses. From a tax standpoint, leasing also offers the advantage of writing off 100% of the lease payments.

Many medical professionals also opt for leasing because of its flexibility. A lease can be negotiated in such a way as to include maintenance, upgrades, and other services. At the end of the lease term, the provider has the option to purchase, renew, or simply return the equipment. This is an important advantage, as it guards against equipment obsolescence. At the inception of the lease, you should consider negotiating a fair market value cap or placing an early buyout option in the contract. These details are rarely in a standard lease, so you must ask the lessor for these items.

Since the payments are lower, providers are able to improve their cash flow and are more likely to match revenues with expenses. From a tax standpoint, leasing also offers the advantage of writing off 100% of the lease payments.

Medical Equipment Loans:

When equipment obsolescence or cash flow isn’t an issue (which is rare in the medical industry), an might be a better alternative. At the end of the lease term, the provider has an asset that he can either continue using or dispose of it on the open market. Borrowers also receive tax benefits, such as the depreciation expense on the equipment and the interest expense incurred during the loan payout.

Using a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization) is a common method of valuing healthcare practices and hospitals. If a healthcare group is considering going public or selling the business, financing equipment through a lender may be advantageous because it would result in a higher valuation than if they had leased the equipment. Leasing would be an “above the line” expense.

Personal Guarantees:

With both medical equipment leases and loans, personal guarantees from the owners are usually required. This provides a comfort level for the lessor or lender. If there is a default, the lender/lessor can attach personal assets of the lessee for the balance of the loan or lease that isn’t satisfied by the liquidation of equipment. Most providers do not want to sign a personal guarantee for obvious reasons. However, if the clinic or practice has a solid track record of profits for five years or more, the lender/lessor will oftentimes abandon the personal guarantee requirement. That is another point that must be negotiated at the inception of the lease.

Choosing a lender or lessee:

Competition is fierce in the equipment financing industry. Acquiring the services of an independent financing consultant is advisable. A properly trained medical equipment financing broker will analyze your particular needs and will know which lender or lessee will be a good fit for your organization. He or she can guide you through the intricate details concerning the contract, which will allow you achieve optimal capital financing.

Kent Harlan has been a CPA since 1984 and has provided consulting, accounting and financial services to several industries. He is the owner of Ozarks Capital Funding, LLC, a Springfield, MO based financial services company.

Understanding Other Medical Equipment Financing

With scientific and technological development in all fields including medicine, newer equipment is being used for diagnosing and treating patients. For example surgery tools, oxygen tanks, operation tables. However, there are some items that do not fall under the general category of medical equipment. These include optometry and dermatological laser equipment.

That does not mean they are any less important than the general medical machines. They carry a hefty price tag as well as serve very crucial rules. Thus, Medical Equipment Financing is required for institutes and centers to be able to make purchases.

Here is a list of some of these machines and their functions. Each of them is very costly and cannot be bought without financial aid:

* Dermatological laser devices
* Medical scale devices
* Veterinary devices
* Medical accounting software machinery
* Optometry devices
* Orthopedic devices

Dermatological Laser Equipment

These help in curing all kinds of wrinkles and skin related problems. If you want to remove unwanted hair, this is the safest option. Most dermatologists make use of this equipment. But due to their expensive nature, purchasing them need some kind of financing.

Medical Scale Equipment

When you need to measure height and weight in an accurate manner this is the equipment to use. Unlike the common forms of weight and height checking machines, these are electronic in nature and beneficial for determining weight and height of animals and people who are physically challenged. It is costly and thus required medical Equipment Financing.

Veterinary Equipment

To determine and diagnose animal health and condition, vets make use of this kind of machines. These generally include veterinary tables, anesthetic materials, surgical lighting, etc. Animals like turtles, kangaroos, deer, monkeys, and household pets, all need to be diagnosed and these machines are necessary to have to be able to do so. It is advisable that one seeks for medical equipment financing for they are an expensive lot.

Medical Accounting Software

When dealing with accounts, whether payable, receivable, medical billing, payroll, etc, one cannot really do without medical accounting software. Not only does it save time but human resource as well. Getting some form of financing for them is a good idea.

Optometry Equipment

For eye related services, optometry devices are used. Whether you’re purchasing penlights or vision charts or retinoscopes, instead of dishing out money from your own pocket, make use of the financial aids available.

Orthopedic Equipment

For patients being treated for problems in their bones, this is the equipment that comes in use. To take care of elderly people who often suffer from musculoskeletal this is vital. But then again, they come with a high price.

Financing other Medical Equipment

There are many such types of equipment that provide good service in the field of medicine. However they all have a very high price and to purchase them, one needs financial aiding. Most professionals and experts who need the services of these devices cannot buy them.

There are companies with experience in medical equipment leasing who can provide financial assistance in purchasing such machines. The time taken to process them is quick. The interest rates are very low and you can repay them in installments every month. There are online application forms available so you do not have to take much trouble at all to procure these aids.

Other Medical Equipment Financing

The advances in medical field increase the need for new medical equipment. The term medical equipment refers to all equipment required in the medical field. It includes operation table, surgery tools, oxygen tanks and much more. There is other medical equipment also like dermatologic laser equipment, optometry equipotent and so on. These types of equipment do not fall under the category of general medical equipment and so they are simply refereed to as other medical equipment. They also play equally important role in the medical field and they carry high price tags. Hence many medical professionals and health care institutes look for other medical equipment financing to acquire them.

Dermatologic laser equipment helps in treating wrinkles and other skin problems. They also help in removing unwanted hairs. Almost all dermatologists require the equipment and so other medical equipment financing is the best option to purchase them.

Medical scale equipment is used to determine weight and height accurately. There are common types of scales that can measure height and weights. But medical scale equipment determines weight electronically. It is mostly useful in determining weight of physically challenged people and animals. Since the price is high, it is advisable to go for other medical equipment financing.

Veterinary equipment includes veterinary tables, surgical lighting, anesthesia supplies etc. They are essential to diagnose the health of animals. Since the veterinarians are required to diagnose health issues in various species of animals range from pets to turtles, kangaroos etc, they are in immense need of veterinary equipment in their clinics. However these types of equipment carry high price tag and so they find it wise to seek financing other medical equipment.

Medical accounting software is essential to deal accounts payable, accounts receivable, payroll, medical billing and so on. It helps saving much time and effort of hospital employees.. Hence other medical equipment financing would be the only option to acquire them.

Optometry equipment is required in the filed of eye care fields. It includes vision charts, pen lights, and retinoscopes and so on. Any smart buyer would seek optometry equipment financing to acquire it instead of investing his\her own money.

Orthopedic equipment is essential for patients undergoing treatment for ailments in bones. Musculoskeletal injuries are common in elder people and so this equipment is essential to care them. Due to their extreme cost, other medical equipment financing is often essential to purchase them.

Other medical equipment performs valuable services in the medical field. However they are not affordable to many medical professionals due to their extreme costs. There are some genuine financing companies that have vast experience in medical equipment leasing. They can understand the need for such equipment and so they provide financial assistance in better terms. They grant fast approval. The applicant can even get approval on the same day itself. They provide financial help at low interest rates. Therefore the medical professionals find it easier to repay the low monthly installments. These financing companies also accept online application form. Hence it is possible now to get financing even without stepping out of home.

Choose Medical Equipment Finance To Remain With Technology Advancement

Equipment leasing has become a better advantage with everyone of us. With technology advancement in every field, it has got hold of medical community too. Medical equipment can be so expensive and out of date in a matter of a few years that everyone is opting for medical equipment finance these days. Cash flow and patient care are the two major concerns on the mind of people who are into this business. It is a very sensible thing for hospitals and private physicians to do to keep up with the technology and provide their patients with the best health care.

You have option to buy the equipment anytime during the lease or even at the end of the leasing term. In this way you can know whether the equipment will be beneficial for you in the coming years before you make a huge cash investment. The biggest advantage is that you are able to keep the state- of -art. This ensures optimum patient care and improves profit. If you had the right medical equipment finance, you would earn quite a bit of revenue as your patients will be getting better equipped facilities and the diagnostic tools at their disposal for tests. What more you can expect when your obsolete equipment is replaced with a newer one with latest technology. Moreover, you are not stuck with an instrument that you cannot use any more or even resell.

You can acquire sonogram, endoscope, ultrasound equipment,surgery tools, oxygen tanks, optometry equipment, orthopedic equipment,medical beds, oxygen machines, wheel chairs, x-ray film processing equipment and so on easily with the help of a reliable equipment leasing company. When it comes to big hospitals or health care institutes, medical accounting equipment becomes essential for handling accounts receivable, payable and with other accounting roles too. It is indispensable for big health care institutes and seeking the help of financing company to acquire this equipment is necessary.

Typical lease terms are for 6 months to five years. And it is best if your cash is strapped or you want to conserve your cash for business. This will enable you to obtain the needed piece of equipment without a major cash outlay.

Benefits of Medical Equipment Leasing

Acquiring medical equipment can be costly, whether you’re a small clinic or a private practitioner. Fortunately, an easy medical equipment financing solution can help businesses get the equipment they need without putting a strain on their cash flow. Traditional financing can be difficult even for established operations as mainstream lending institutions like banks are still hesitant to dole out credit to SMEs.

Meanwhile, medical equipment leasing offers small businesses like private clinics a sensible financing solution to acquire the assets they need for their operations, plus a number of other important benefits including:

- Capital conservation – precious cash can be conserved for other uses including supplies and staff. This reduces the strain on your cash flow and lets you get the equipment you need when you need it – instead of needing to save up or borrow against another asset.

- Total financing solution – because a lease agreement is essentially a long term rental, many additional costs can also be covered in the arrangement. This can include freight, installation and maintenance depending on the type of equipment you lease – ask about commercial vendor finance from your supplier to learn more.

- Tax benefits – leasing medical equipment is often 100% tax deductible as the monthly payments are considered an operational expense.

You can choose to finance medical equipment for any type of medical practice including veterinary and dental. From examination tables to surgical equipment – it’s easy to keep your business up to date. As medical technology continues to develop and new equipment is released, your practice can benefit from being among the first to adapt new technology and avoid equipment becoming obsolete – so you can always deliver the best level of care to your patients.