Medical Equipment Leasing Helps Hospitals Acquire New Technology
By Ibby Smith Stofer
Medical technology is the lifeblood of healthcare providers. They need to have tools to improve patient care, and they need the equipment when the patient needs it, not necessarily when the capital budget is free.
Supply chain leaders, risk managers, and CNOs all recognize this reality and often have to convince the finance officers of the needs and benefits of acquiring or upgrading equipment or sacrifice having the technology. That is unless there are alternative finance options available to them.
Medical device companies often bring new or improved technology to the market before the expected (budgeted) life expectancy of the current devices has occurred. This timing can create conflict with the Chief Finance Officer (CFO) and the clinical and supply leadership regarding budget access and spending priorities.
New or upgraded technology often improves care, patient and clinical satisfaction, and helps with recruitment and retention of staff and marketing of services to attract patients. Sounds like a strong justification; however, upgrading to new technology may not meet the needs of all areas of the healthcare system.
The finance team must balance this against an ever-shrinking working capital budget, and strategic projects such as an acquisition of alternative care sites, physician recruitment, and other revenue-generating sources and investments. The old cliché, "if it isn't broke, don't replace it" adds to the frustrations of clinicians and device salespeople. However, to finance, conserving cash, and following the cliché's guidance often seems sound.
Finance is, however, also tasked with improving patient care and safety as well as managing the budget. Patient care is as essential to this area as it is to the clinical and supply chain leaders. The balancing can be challenging for even the most seasoned veterans. Medical device companies must provide options that meet both clinical and financial strategic goals.
The CFOs of the medical device company and the healthcare provider must ensure that sufficient cash is available to make R&D investments, operational expenses, or other investment opportunities. The CFO or their team members do much more than merely managing budgets. Finance leaders often manage strategic direction as well as staying abreast of new regulations, customer expectations, and guiding merger and acquisition initiatives. These are among the reasons that the reins of spending capital funds are often held tightly and undergo extensive review at both the provider and the device companies.
Having the best technology and the ability to demonstrate cost reductions and patient satisfaction is not enough. Many medical device companies offer more than just a purchase option, but this can be challenging for the manufacturer's CFOs. Options that include payment over time involve credit review, approval, and administrative tasks, including billing, collection, title, and tax considerations. Often, the CFO of the device manufacturer will seek independent third party companies to take on these risks and tasks.
These third-party relationships allow the device companies to offer acquisition options in addition to their advanced technology without the costs and risk of extending terms directly. However, simply assuming that any finance provider will be the answer can backfire. When 3rd party terms, contracts, and customer service are unfavorable for the customer, it can leave a negative impression of the device company.
Often a solution can be met by forming a partnership with a lease partner who has experience with both the end-user healthcare customer and the medical device industry. They understand the value of products and services offered by device companies as well as the risk of the healthcare provider.
Med One Group has been serving as a bridge to these diverse and often conflicting needs for nearly three decades and has specialized in only this market. They provide the finance options that meet the needs of the customers' financial requirements, while the device company aligns with and meets the needs of the clinician and supply chain staffs.
They do so with a variety of finance options and often customize the terms to fulfill the requirements unique to each customer. Med One can offer private label plans, use agreements, and, other creative solutions that most medical device companies would not consider offering directly.
Med One often requires no agreement with the medical device manufacturer and provides upfront payment for products, services, training, implementation, and software. We can also do sales training, offer rental programs, and biomedical service.
For more specifics about our leasing options, visit our Healthcare Leasing page.