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.
In my recent column “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.
Specifically, the 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 Key Equipment Finance, a bank-held equipment finance company.