There are many reasons a medical practice might consider investing in new equipment. Expanding services or growing the number of offices in a group may require new machines to fill the gaps, for example.
The competitive landscape may also influence the need for new or updated devices. Medical practices should look at the market around them to find out if competitors are providing similar services. Equipment that offers patients a wider array of services or allows physicians to deliver care in a better way can be a differentiator in a tight market.
Upgrades and replacements may also prove necessary if an office hasn’t kept up with technology. Physicians are likely to discover they’ve fallen behind competing providers as a result, or that upkeep and other costs associated with outdated equipment have become untenable.
Market forces outside healthcare may also prompt a practice to evaluate new equipment options. Favorable economic conditions make capital more readily available, not to mention more attractive.
Ready for new equipment?
Certain areas of a practice are more likely to be candidates for new machinery than others. Radiology is one specialty often cited for its use of expensive equipment. Devices are becoming more advanced, and integrated setups such as an MRI-guided linear accelerator can easily run several million dollars. Other operational areas, from IT infrastructure to a building’s heating and cooling systems, may also require expensive equipment from time to time.
Running the numbers
Medical groups typically focus on conserving cash and optimizing their distributions at the end of the year. With those issues in mind, physician practices need to think through how this equipment is going to impact their daily cash flow.
When it comes to determining ROI, the most important element is the equipment’s benefit to the practice in the form of financial return or clinical importance. For instance, an orthopedic surgeon’s practice would have trouble surviving without in-house imaging capabilities. The importance and clinical relevance in that scenario is clear. The same criteria can be applied to new equipment purchases as well as upgrades and replacements. If a practice is replacing an essential system, it might add opportunities to enhance patient care or improve the services provided to your patients.
Lease or Buy?
When weighing whether leasing or purchasing makes more sense for your practice, one factor to consider is how heavily you plan to utilize the new machine. Lease terms and payments are often calculated based on usage and the expected useful life of the equipment when the lease period comes to a close.
In a survey conducted by the Equipment Leasing & Finance Foundation, 78 percent of respondents said their business used at least one form of financing (leasing, secure loans and lines of credit) to acquire new equipment.
Navigating the lease process
The financial effects of a lease stretch farther than just the monthly payments, which can typically be tailored to suit your practice’s financial position. Careful planning of your investment’s timing will also have a big impact on how much the lease costs in the long run.
Is your building ready for new equipment?
Before making a final decision to invest in expensive equipment, your practice needs to consider if you have the space to support everything that device requires. Build-out costs can add significantly to the total price of the equipment— you might need to rebuild part of the room, expand the space or upgrade utilities. Typically, manufacturers of equipment can give you a pretty good idea of what would be needed for installation.
Get all of the details here: