Benefits of Leasing Medical Equipment Rentals
Leasing medical equipment rentals are a necessity for many practices and hospitals. New equipment can be prohibitively expensive. Many practices and hospitals cannot afford to buy used while trying to build a patient base, as that might inspire less confidence than the look of a new piece of medical machinery. The medical industry is like any other, and economics are nearly as important as the medicine itself.
Without money, healthcare providers cannot keep the lights on, power the equipment, or pay their staff – so finding ways to preserve capital, cut costs, and maximize patient care all the same time are essential. Enter equipment leasing. By leasing medical equipment rentals versus buying new equipment, you can better manage a hospital’s upfront costs and keep a practice’s cash flow alive, among a list of other benefits. Let’s look at why medical equipment rentals can be the difference between surviving a crisis and closing up shop.
Leasing Medical Equipment Rentals Preserve Capital
Capital is more than cash in reserve; it is the combined value of a company’s assets and can be defined as either working capital (such as an owned piece of equipment), equity capital (from public or private money invested in a hospital, through the stock market or government subsidies), and debt capital (comprised of the credit a hospital takes on for current and future investments).
Purchasing new equipment may provide a hospital with capital value, but it comes at a tremendous upfront cost. This can be a significant risk for a business model that already struggles to cut costs and create profit margins. It’s an even greater risk for private practices that might not receive the same support as larger organizations and for-profit healthcare corporations. Leasing equipment allows private practices and hospitals alike to minimize upfront costs at the cost of creating a long-term obligation.
A lease also helps preserve a practice’s cash flow, in addition to safeguarding its financial budget. This means lower costs and more cash to cover other crucial expenses. Furthermore, smaller practices can avoid the initial capital expenditure of an equipment loan or an outright purchase through a loan and eliminate the need for capital gains taxes.
Leasing Equipment Means Staying Current
A lease usually means new equipment rather than outdated equipment. This makes equipment leasing more critical in industries where staying current can be the difference between staying afloat and going under. The medical sector is one of these industries, as newer equipment helps improve patient care and convenience and helps your practice create a more positive image for itself.
New Equipment Attracts Medical Talent
In addition to inspiring confidence in patients, new equipment also helps attract fresh talent. Doctors want to work with the latest tools and the latest technologies. Leasing helps your practice or hospital afford to keep up with medical progress and give your physicians the tools they want to work with.
Equipment Leasing Provides a Budget for Maintenance and Repair
Medical equipment is not the kind of equipment to go unused in a storeroom. It often sees daily, rigorous use, working with human bodies and undergoing severe stressors. This means significant wear-and-tear for many types of medical equipment and a need for regular maintenance and upkeep – especially seeing how lives depend on fully-functioning medical equipment. A lease not only often involves included upkeep and maintenance, but it also allows you to limit your use of the equipment to its warranty window, allowing you to renew your lease with a new piece of equipment and a new warranty whenever it expires.
Equipment Leases Are Flexible
Lease terms can be adjusted to meet demands and compromises between vendors and practices. You can opt in or opt-out of certain perks or negotiate the leasing structure to improve your practice’s cash flow. This is especially important when starting a new practice, as money can be tight, and patients few and far between.
Equipment Leases Preserve Term Loans
There will always be a time when a company must borrow money to cover costs, create debt capital, finance an expansion, or build credit. Leasing your medical equipment instead of acquiring it outright by taking out a loan preserves your loan options, allowing you to opt for other uses for that cash. Some things cannot be leased so quickly, like an office renovation. Practices and hospitals are no exceptions to this.
Equipment Leases Replace the Hassle of Selling
By owning equipment outright, you also sign up for the costs of finding a way to sell it when the time comes to upgrade. It is not easy to resell or get rid of a piece of medical equipment, and doing so often requires the help of a specialized broker. With a lease, you need not worry about the logistics of upgrading to a new piece of equipment. It can be part of the terms of the lease.
When Is a Purchase Preferred?
There are times when it may be in your best interest to purchase equipment or seek out an equipment loan rather than lease medical equipment. Equipment that you can easily afford to own outright is better bought than leased, especially if you plan to use it for years to come. Leases will always be more expensive in the long term if you can stomach the initial cost.
On the other hand, there are times when an equipment loan is the better alternative. For example, a piece of equipment that will continue to serve your practice for over ten years may be worth financing over a few years versus leasing it at a lower rate for the entire ten years. The longer you plan to keep a piece of medical equipment, the better it is to seek financing versus a rental lease.
However, because it generally serves you better to stay current with advances in medical technology, both for patient care and your practice’s image, you might find that the benefits of a lease for medical equipment often outweigh the help of an overall cheaper equipment loan. Weighing the pros and cons of a purchase or leasing decision requires a thorough deliberation of all available factors, from financial ones to your reputation and patient care. If you are interested in renting or leasing services, discuss your options with a professional lender with experience serving the healthcare industry.