When Should I Rent Medical Equipment For My Facility?
When should I rent medical equipment? It depends. There are many options when it comes to renting or buying equipment for your facility. Learn more.
The United States has a reputation for having one of the most complex healthcare systems to navigate among the developed world. The US provides state-of-the-art medical care both to insured payers and private patients. This also comes with struggling with immense costs and inadequate overall healthcare coverage.
Furthermore, state-of-the-art medical care is expensive – and hospitals interested in staying financially viable and paying off their debts need the revenue that comes from the added value proposition of new equipment, better procedures, and public funding for research.
This issue has only been compounding in recent years with the US’ aging population, the financial and healthcare burden of the coronavirus pandemic, and steadily increasing healthcare costs. Hospitals in need of new equipment often simply do not have the money to buy it outright – but cannot afford to skip the investment, either.
If your clinic, hospital, or private healthcare facility needs new equipment, seeking better financing options is crucial.
Leasing or renting medical equipment can be cheaper and smarter in the long term. This allows you to leverage the ongoing and growing innovations in health technology, particularly when it comes to guided surgery systems, robotics in medicine and patient care, the utility of machine learning in diagnostics, imagery, and medication systems administration, and much more.
Why Rent Medical Equipment, to Begin With?
If you are in the market for new medical equipment, you generally have three options:
- Pay now.
- Pay over time (financing).
- Pay less for the right to use (leasing/renting), but not to own.
The first is the simplest and the one that bears the most upfront cost. It’s also the cheapest for its value because you do end up owning the equipment. While you pay less upfront when seeking financing, you will end up with a larger bill at the end of the amortization period.
But the argument for renting medical equipment is very strong. Because of the rate at which health technology continues to innovate and make strides, specific medical equipment may end up becoming outdated in just under ten years. You can lease equipment for a few years, then negotiate a new lease for a newer piece of equipment.
Furthermore, leasing different pieces of equipment from the same or several different vendors allows your business to build a strong credit history and can help you find better leasing deals for medical equipment. Suppose you are a requisitions and financing agent for a hospital or clinic. In that case, finding the right vendors and lenders to work with is crucial for the business’s long-term health and financial viability.
Your doctors should focus on providing quality healthcare and working on patient satisfaction – and it’s your job to ensure that the money coming in is smartly reinvested to keep the hospital going. Renting equipment is a great way to avoid the excessive blow that a brand new MRI machine or diagnostic tool might have on your facility’s working capital.
It’s Tough Out Here
There are plenty of reasons why it’s expensive to run a clinic or any other kind of healthcare facility in the United States.
There are healthcare and hospital financing woes, budgeting constraints, bottlenecks, patients with increasing care needs and an ever-diminishing ability to pay for them. This includes COVID-19 costs, picky health insurance companies, and an aging population. This just scratches the surface of why it’s difficult to secure funding as a hospital and break even.
Anything the state or employers can’t cover via health insurance needs to be paid by the patient, and when patients can’t pay their bills, the hospital absorbs the costs. While only about 2 percent of patient revenue is counted as so-called bad debt, that still amounts to about $56 billion in 2018 alone, among 4,125 healthcare facilities. Those numbers are better than they were in 2015, but forecasts for the impact of the pandemic on healthcare costs and people’s ability to financially handle their medical bills are grim.
Hospitals in the US operate on the same principles as any business and cannot exist without a profit margin. It isn’t a question of morals – our healthcare system isn’t set up to eliminate the reality of health disparities. But better financing options and more efficient medical technology can help healthcare providers get closer to achieving health equity, better serving the community while providing better levels of care.
How Renting Medical Equipment Works
How does one rent medical equipment, to begin with? It’s not much different from renting a vehicle for commercial use. You find the right vendor for your equipment of choice and explore financing options through a lender or the vendor.
Some vendors specialize in providing medical equipment alongside comprehensive financing or leasing options. These vendors may specialize in other industries as well, such as heavy machinery, manufacturing equipment, IT infrastructure, and more.
As with any other commercial acquisition, due diligence is essential – in other words, don’t forget to do your homework.
Shop around for better offers, talk to other vendors, compare prices and industry stories. If you’re deciding to lease or finance your equipment, purchase a detailed credit report and financial health check on your hospital to see what you should expect and where you might be able to improve before starting the process.
Renting Medical Equipment vs. Financing Medical Equipment
If buying is out of the question, you’re left with the option to rent or finance. The answer depends on whether the equipment you are planning to acquire is meant to last twenty years or is meant to be regularly replaced as technology moves forward.
Specific medical equipment is better owned than leased, with its value increasing the longer you plan on using it. This can include certain lab equipment, incubators, fluid pumps, and diagnostic tools like imaging equipment.
Other equipment is best owned for a few years, then replaced for an improved, safer, and easier-to-handle product. These include medical lasers and surgical machines, mobility assistance devices, pain pumps, life support equipment, and more. Now that the question of “hen should I rent medical equipment” is answered, you can take the best course of action.