4 Ways to Control Your Facility's Medical Equipment Acquisitions
After labor, the cost of medical equipment and supplies is the second-largest expenditure in your medical facility's budget. The average hospital owns or rents over 35,000 different medical devices at any one time. Managing these costs are the bane of many administrators' existence. On the one hand, medical facilities can only operate when they are financially secure. On the other hand, medical facilities cannot ethically or legally sacrifice patient safety. Here are four ways medical equipment acquisitions give you control over finances:
Control Over Billing
Ensuring that all billings are accurate and complete is the best way to navigate the health insurance bureaucracy. Billing errors can create many problems, including:
All of these problems lead to one inescapable end - discounting bills to prevent patients, insurance companies, and the public from calling your facility heartless, incompetent, and greedy. Ensuring that billings are complete and accurate before being sent reduces this risk. Alaris pumps use coding systems to record each product consumed and associating it to the patient's record. Not only does it reduce medical errors, but makes it nearly impossible to make billing errors since this information records in real-time. In other words, Alaris smart pumps do not rely on the transcription of billing entries from handwritten documents or the memories of your medical staff to record billing entries. Rather, Alaris pumps have an optional barcode scanner to capture the patient's code from his or her wristband and the code from the IV infusion and associates them to one another. This type of automatic record-keeping is key to reducing or eliminating billing errors, reducing or eliminating medical errors, and creating a paper trail if the facility must dispute whether a billing error or medical error occurred.
Control Over Budgets
Budgetary allocations are often handcuffs that administrators must find creative ways to escape. Programs for medical equipment financing and medical equipment rentals give administrators one pathway to acquire medical equipment within their budget constraints. For example, medical equipment rentals allow administrators who are tight on their capital acquisitions budget to rent instead of buying. Similarly, medical equipment financing enables administrators to pay for equipment over time, so the acquisition does not blow an enormous hole in the capital acquisitions budget. With both of these options, terms are often flexible, allowing the hospital to maintain its financial health without compromising on healthcare services.
Control Over Taxes
While it may seem morbid for a healthcare administrator to use the old saying, “the only things that cannot be avoided are indeed taxes and death,” unless your facility is a non-profit, tax strategy is often one of your considerations in acquiring equipment. The cost of acquiring revenue-generating equipment, such as Alaris pumps, can be handled in one of two ways. If the Alaris pump is purchased, the value of that purchase depreciates over the lifetime of the equipment, and that annual amount of depreciation is tax-deductible. Conversely, if the Alaris pump is rented, that entire expense is tax-deductible in the year it was paid. The strategy that works best for your medical facility depends on your particular situation. For example, if an Alaris pump generates a great deal of revenue, the offset provided by expensing the total rent may reduce your facility's tax liability substantially more than the depreciation deduction would.
Control Over Your Balance Sheet
Medical equipment financing is an equipment loan that shows up as a liability on the balance sheet. Conversely, medical equipment rentals show up as an expense on the balance sheet. Depending on your balance sheet and your situation, there may be benefits or drawbacks to either. For example, when your medical facility is part of a publicly held corporation or is seeking loans, liabilities on your balance sheet may be interpreted as detrimental to your facility's financial well being. On the other hand, purchased equipment is an asset contributing to your facility's financial health, whereas rented equipment is not an asset. The various options for acquiring medical equipment acquisitions can give you control over your facility's budget, taxes, balance sheet, and billings.