Today’s healthcare provider must depend upon very expensive equipment to function and grow their practices and leasing is a common means of financing. As medical technology is ever changing and new equipment enhancements are developed, renting equipment is a logical choice for a variety of reasons. Medical Equipment leasing can keep their balance sheet intact, as monthly equipment lease payments can be classified as operating expenses. This would also allow the provider to benefit from tax deductibility.

The worth of medical equipment does not come from owning it, but rather from the results of its use. With renting, there are no large down payments so the lessee’s capital reserve remains intact. Leasing is also more easily attainable than from bank financing, which requires extensive documentation and even personal guarantees. Most any piece of medical equipment can be leased, including CT scans, surgery tools, lab testing machines, x-ray machines, heart rate monitors, and sonograms.

Other benefits from leasing medical equipment:

Flexibility: As the provider’s practice grows and equipment technology increases, leasing allows for the owner to easily add-on or upgrade their package. It is important to build in upgrade features at the inception of the lease. Also, installation and maintenance, and other services can be added to the lease.

Speed: As opposed to bank financing, leasing can provide the needed equipment in a matter of days. Typically, a one-page lease agreement is executed and approval can occur in a matter of hours. It often takes bank loan committees several weeks to approve an equipment loan.

Tax Advantages: An operating lease (also known as a true lease) generally allows the lessee to write off 100% of lease payments made during the year. The equipment write-off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year. The deduction is also the same every year, which simplifies budgeting.

Medical Equipment leasing can
keep their balance sheet intact,
as monthly equipment lease
payments can be classified as
operating expenses.Keeping equipment “state of the art”: As mentioned previously, structuring an add-on or upgrade provision in the lease is critical due to the ever-changing technological advances in healthcare. Adding these clauses in the lease agreement lessens the peril of being stuck with outdated equipment.

Maintains capital reserves: Leasing allows you to buy the equipment and tools you need today while spreading out all the payments over time. This provides you with a cash reserve for day to day expenses. Since a true lease is not a long term obligation, it will not show up on your balance sheet, so the company will be more attractive to a conventional lender when or if one is needed in the future.

A physician starting a practice or even acquiring one can benefit from entering into an equipment lease. Purchasing a medical equipment package can cost several hundred thousand dollars and put the provider behind the eight ball from the very beginning. Not only can leasing alleviate that dilemma; it also provides budgetary, tax, cash flow, and upgrade benefits that can allow the provider to flourish for years to come.