Mark E. Hoffman

A Closer Look at Medical Imaging Equipment Leasing

,” I addressed some of the benefits of financing new equipment for diagnostic imaging providers. Once you’ve made the decision to finance new healthcare equipment, the next step is navigating the options available to your practice and assembling the best team for your unique needs.

Although both the healthcare and financial services industries have undergone significant changes – and changes to certain types of lease accounting are still forthcoming – the process of financing equipment doesn’t have to be complicated or intimidating.

Perhaps the most important step in financing is to seek the guidance of an experienced and reliable financing partner. When making this choice, consider whether the finance company:

- Understands your practice’s needs;
- Is responsive to your questions and has a streamlined credit application approval process; and
- Is financially stable and can demonstrate previous experience offering expert guidance through economic ups and downs.

Equipment Leasing and Finance Association

, a trade group representing financial services companies and manufacturers, recommends businesses consider the following 10 questions before signing a lease. These questions take into account the “before, during and after” stages of a lease.

1. How am I planning to use this equipment?

2. Does the finance representative understand my business and how this transaction helps me to do business?

3. What is the total finance payment, and are there any other costs that I could incur before the lease ends?

4. What happens if I want to change this financing agreement or end it early?

5. How am I responsible if the equipment is damaged or destroyed?

6. What are my obligations for the equipment (such as insurance, taxes and maintenance) during the finance agreement?

7. Can I upgrade the equipment or add equipment under this agreement?

8. What are my options at the end of the finance agreement?

9. What are the procedures I must follow if I choose to return the equipment?

10. Are there any extra costs at the end of the agreement?

A good financing partner will take the time to ask and, more importantly, listen to you as you work together through the above questions. The goal is to gain an understanding that will make the financing package as attractive as possible for your practice, because after all, the value of equipment comes from using it, not owning it.

Mark Hoffman is senior vice president of the healthcare division of 

Articles

Once you’ve made the decision to finance new healthcare equipment, the next step is navigating the options available to your practice and assembling the best team for your unique needs.

What to Consider in Medical Imaging Equipment Finance

Rapid advancements in medical imaging are transforming patient care and enabling providers to deliver faster, more accurate diagnoses earlier; yet at the same time, many imaging providers are reluctant to invest in new equipment due to cash constraints and financial concerns.

Imaging providers at private clinics and hospitals nationwide are making do with outdated equipment as continued cuts to reimbursements and decreased revenue from philanthropy, investments and operational earnings have business managers delaying capital equipment investments.

For many imaging centers and hospitals, equipment leasing may be the answer. Equipment leasing makes it easy for healthcare providers of all types to obtain the equipment required to provide top-notch patient care, increase throughput and work more efficiently, while conserving cash and remaining flexible.

Some of the other recognized benefits of leasing healthcare equipment include:

• Tax treatment: The IRS does not consider certain leases to be a purchase, but rather a tax-deductible expense. Therefore, imaging providers can deduct the lease payments from income, thus reducing the net cost of the lease.

• 100 percent financing: Since a lease often does not require a down payment, it can be equivalent to 100 percent financing. Imaging providers can conserve the capital that would have been used for a down payment and reinvest it in the business.

• Flexibility: As healthcare facilities grow and needs change, the lessee may be able to add or upgrade technology at any point during the lease term.

• Asset management: A lease provides the use of the technology solution for specific periods of time at fixed payments. The leasing company assumes and manages the risk of technology ownership. At the end of the lease, if the imaging provider elects to return the technology, the leasing company is responsible for the disposition of the asset.

• Upgraded technology: Technology solutions that could depreciate quickly should be leased to limit a healthcare facility’s risk of getting caught with obsolete equipment. Plus, leases make it easier to upgrade or add technology solutions to meet ever-changing needs.

• Speed: Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Many leasing companies approve applications within a few hours.

• Improved cash forecasting: When imaging providers lease, they can accurately forecast the cash requirements for equipment since they know the amount and number of lease payments required, and with leases there are no floating fees.

• Flexible end-of-term-options: There are typically three flexible options at the end of a term. The lessee can return the equipment, purchase the equipment from the leasing company or extend the lease for an additional period of time.

• Easier financing than loans: With a lease, imaging providers can avoid requirements like compensating balances, large down payments, client list reviews and cash-flow projections, making the finance process faster and easier.

For more information about equipment leasing or to find an equipment leasing company in your area, visit the 

Equipment Leasing and Finance Association

Equipment leasing creates a tax deduction, frees capital for other investments, allows from updates at any time, and increases work efficiency. 