How Much Does It Cost To Finance Medical Equipment?

If you take into account all the quantifiable costs that your health facility might encounter during the entire life-cycle of a lease, then you would have a very clear image of how much it would cost to finance medical equipment.

finance medical equipmentWhen people do a lease versus buy analysis, they tend to look at issues such as tax impact and rates but forget about all other significant costs. Most of these costs can easily be identified after a close review of the lease agreement.

Anyone who is savvy enough and very familiar with the leasing industry will tell you that lease rates are not the major factor in determining how much it would cost to finance medical equipment.

It comes as no surprise that leasing companies can conveniently choose to leave out of their advice, the risks that come with leasing medical equipment. It isn’t unusual for potential lessees to make calls to leasing companies asking for advice on leasing equipment and looking for the lowest monthly solutions. In such scenarios, leasing companies are more than happy to play their part as “consultants”. While their advice could be useful, you shouldn’t rely entirely on it; instead, you should work with a trusted and credible leasing professional who understands the immediate and long term goals of your health facility.

Forget About The Rates, Focus On How Much It Would Cost You To Finance Medical Equipment

One of the most highly commoditized factors of a lease agreement is the lease rate but it should not be the sole issue that you should focus on. A good lease analysis should include other leasing costs such as interim rent payments and early lease termination penalties. They contribute greatly to the risks associated with leasing and affect the overall cost of your lease.

Lease rates can change during negotiations. The leasing process begins with a letter of intent that outlines the elements of the deal and non-binding lease quotes. A negotiation of the lease terms follows and when a mutual agreement is reached, the final lease agreement documents are drafted and signed. The terms and conditions of the final agreement are usually very different from those initially presented by your lessor.

There are many reasons for changes in medical equipment finance rates and if you do not carefully analyze the contract, you might end up paying too much for your lease. In fact, what you intended to be an operating lease, if not carefully reviewed, might as well qualify to be something else.

You have to understand that lease rate factors are not the same as interest rates. There are other costs beyond monthly lease payments embedded within the lease contract.

You should research and record all your health facility’s historical leasing costs and not just adding up lease payments. With this type of information, you can easily do a lease versus buy analysis that will help you determine if leasing is the best path for you to take. If it is, the information that you collect will help you compare lease proposals from different leasing companies.

Think Before You Lease

Many health facilities can save a lot of money through financing medical equipment. Most report to paying about 90% of the original cost of equipment. These savings depend on the strategies you use to deal with risk factors such as repercussions for late return of equipment, getting out of your lease early and failure to meet notice period requirements.

Get an Instant Quote on Your Equipment Lease, Free

Choose an equipment leasing company based on a comprehensive equipment acquisition plan. This involves planning ahead instead of reacting to the sudden need of procuring equipment. Failure to plan ahead often leads to poor risk assessment and financial analysis of leasing agreements. Such cases often lead to leasing decisions being driven by convenience or the lowest rate instead of the lowest overall cost of the lease.

Conclusion

The best approach in determining how much it would cost to finance medical equipment is to factor in several elements of your lease. All costs should be included.

Overall, leasing medical equipment still remains the best way of procuring much needed hospital equipment. Unfortunately, many health providers enter into lease agreements with very little consideration of the risks involved. Protect yourself by approaching the process of leasing hospital equipment in a way that will ensure you minimize the costs and risks while ensuring you get state-of-the-art equipment.

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