| Healthcare providers, particularly those with a large mix | | | | refinance equipment. Many providers are making very |
| of Medicare related transactions, are in for a cash and | | | | large monthly payments because they have opted to |
| profit squeeze. Refinancing existing medical and office | | | | execute four or even three year leases. There are |
| equipment leases can be a way to ease the pressure. | | | | now medical equipment financing options available that |
| According to AMA President Jeremy Lazarus, 45% of | | | | can spread those payments out over a 96 month |
| physicians in the American Medical Association plan to | | | | period. For example, a physician needed $500,000 of |
| decrease or stop the acceptance of new Medicare | | | | equipment to start his practice and signed a 48 lease. |
| beneficiaries if Congress does not act to stop a 5% | | | | Payments on the lease, assuming an 8% interest rate, |
| decrease in Medicare payments. These payment | | | | would be approximately $12,200 per month. If that |
| reductions are scheduled to go into effect in 2007. | | | | equipment were refinanced at the beginning of year |
| According to Lazerus "Over the next nine years, | | | | two, the balance would be approximately $380,000. |
| Medicare will cut physician payments 37%, unless | | | | Refinancing that balance over 96 months would result |
| Congress acts before January 1, 2007", adding, "at the | | | | in payments of $5,400 per month, a cash savings of |
| same time, the cost of caring for those patients will | | | | $6,800 per month or $81,600 per year. |
| increase 22%, and that math just doesn't add up". The | | | | The provider should carefully review the equipment |
| cuts, which would reduce payments by $2.8 billion over | | | | being used to determine if he is a good candidate for |
| five years, are included in a 2006 deficit reduction | | | | long term refinancing or even buying new equipment |
| package. | | | | for longer amortizations. If the medical equipment is |
| Should the projected cuts hold up, providers will need | | | | likely to withstand an onslaught of technical advances, |
| to become more operationally and financially efficient. | | | | a refinancing could be the ticket to helping offset the |
| One way to offset the decreased cash flow is to | | | | specter of Medicare payment deductions. |