| Today's healthcare provider must depend upon very | | | | Speed: As opposed to bank financing, leasing can |
| expensive equipment to function and grow their | | | | provide the needed equipment in a matter of days. |
| practices and leasing is a common means of financing. | | | | Typically, a one-page lease agreement is executed |
| As medical technology is ever changing and new | | | | and approval can occur in a matter of hours. It often |
| equipment enhancements are developed, renting | | | | takes bank loan committees several weeks to |
| equipment is a logical choice for a variety of reasons. | | | | approve an equipment loan. |
| Medical equipment leasing can keep their balance | | | | Tax Advantages: An operating lease (also known as |
| sheet intact, as monthly equipment lease payments | | | | a true lease) generally allows the lessee to write off |
| can be classified as operating expenses. This would | | | | 100% of lease payments made during the year. The |
| also allow the provider to benefit from tax deductibility. | | | | equipment write-off is tied to the lease term, which can |
| According to industry research, over $3 billion of | | | | be shorter than IRS depreciation schedules, resulting in |
| medical equipment was leased last year in the United | | | | larger tax deductions each year. The deduction is also |
| States. In its simplest form, the lessor purchases the | | | | the same every year, which simplifies budgeting. |
| equipment and then rents it to the lessee. At the end | | | | Keeping equipment "state of the art": As mentioned |
| of the lease term, the lessee has the following choices: | | | | previously, structuring an add-on or upgrade provision in |
| · Buy the equipment | | | | the lease is critical due to the ever-changing |
| · Re-lease the equipment | | | | technological advances in healthcare. Adding these |
| · Rent new equipment | | | | clauses in the lease agreement lessens the peril of |
| · Return the equipment | | | | being stuck with outdated equipment. |
| The worth of medical equipment does not come from | | | | Maintains capital reserves: Leasing allows you to buy |
| owning it, but rather from the results of its use. With | | | | the equipment and tools you need today while |
| renting, there are no large down payments so the | | | | spreading out all the payments over time. This provides |
| lessee's capital reserve remains intact. Equipment is | | | | you with a cash reserve for day to day expenses. |
| also more easily attainable than from bank financing, | | | | Since a true lease is not a long term obligation, it will not |
| which requires extensive documentation and even | | | | show up on your balance sheet, so the company will |
| personal guarantees. Most any piece of medical | | | | be more attractive to a conventional lender when or if |
| equipment can be leased, including CT scans, surgery | | | | one is needed in the future. |
| tools, lab testing machines, x-ray machines, heart rate | | | | A physician starting a practice or even acquiring one |
| monitors, and sonograms. | | | | can benefit from entering into an equipment lease. |
| Other benefits from leasing medical equipment: | | | | Purchasing a medical equipment package can cost |
| Flexibility: As the provider's practice grows and | | | | several hundred thousand dollars and put the provider |
| equipment technology increases, leasing allows for the | | | | behind the eight ball from the very beginning. Not only |
| owner to easily add-on or upgrade their package. It is | | | | can medical equipment leasing alleviate that dilemma; it |
| important to build in upgrade features at the inception | | | | also provides budgetary, tax, cash flow, and upgrade |
| of the lease. Also, installation and maintenance, and | | | | benefits that can allow the provider to flourish for |
| other services can be added to the lease. | | | | years to come. |