A Closer Look at Medical Imaging Equipment Leasing

March 1, 2012

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

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Imaging providers at private clinics and hospitals nationwide are making do with outdated equipment as continued cuts to reimbursements and decreased revenue from philanthropy, investments and operational earnings have business managers delaying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

Mark Hoffman is senior vice president of the healthcare division of Key Equipment Finance, a bank-held equipment finance company.