Medical equipment leasing on the rise
Rising demand for medical equipment hire
Medical equipment leasing is fast becoming the go-to option for healthcare providers.
The healthcare industry in the UK is increasingly being influenced by factors such as:
- longer life expectancy
- a continual rise in the geriatric population
- an increasing incidence of chronic disorders caused by a less-active population
- an escalating rise in national healthcare costs.
It is also witnessing the expansion of the private healthcare sector and a growing demand for instant access to medical attention.
All these factors combine to create an increased need for new and efficient medical equipment to facilitate effective diagnosis and treatments.
Both private and public healthcare organisations are under constant pressure to match the pace of medical technologies and offer optimum treatment and care, despite, in many cases, constraints on spending.
High degree of obsolescence
Currently, the purchase of medical equipment, which comes loaded with the very latest in novel technologies and features, involves high capital costs.
In addition, due to the rapid pace of technological development, coupled with the growing complexity in healthcare provision, medical equipment also suffers from a high degree of obsolescence – resulting in the regular and costly need for upgrading.
At the same time, the increase in the number of patients seeking diagnostics and therapeutic help is subjecting medical equipment, devices and instruments to increased wear and tear, thus further shortening the replacement cycle.
Widespread capital constraints
The capital budgets of many hospital trusts have been affected by some of the austerity measures the Government has been forced to introduce, as it attempts to reduce government borrowing.
Other key factors aggravating funding constraints include healthcare reforms, slow down in government annual healthcare expenditure, and changing medical reimbursement structure.
As a result, there is every likelihood that medical equipment purchasing will come under increasing pressure due to the budget constraints facing many hospitals trusts, nursing facilities, and commercial diagnostic laboratories,
Medical equipment leasing increasing
For the reasons already identified, more and more medical equipment providers are offering leasing or rental as a means of procuring the very latest equipment.
The medical equipment leasing industry is booming. The rationale behind this is that renting or leasing medical equipment provides significant financial benefits compared to loans and credit purchases, and is ideal for those hospital trusts and other healthcare institutions that may be constrained by tight budgets.
Many hospital trusts are increasingly opting for medical equipment hire, since this reduces the pressure on capital budgets to acquire the medical equipment when they may have been allocated to other projects.
At the same time, healthcare service providers are increasingly interested in acquiring bundled products such as equipment, software and other services from a single source.
Benefits of leasing
Medical equipment leasing and rental services offer considerable advantages in comparison to other modes of equipment financing, including cash conservation and a protection from obsolescence.
Both cash-strapped small-scale healthcare facilities and resource-rich large-scale medical trusts are opting for rental medical equipment due to the lower total cost of ownership, and the cash-flow benefits available when compared to the outright purchase of medical equipment.
Some of the most commonly leased or rented medical devices currently include ultrasound, remote patient monitoring equipment, X-ray systems and other laboratory equipment, which are also continually changing in the face of new developments.
Advantages of medical equipment leasing at a glance
- An alternative funding option to up-front capital investment.
- Facilitates the procurement of new/replacement equipment and the latest technology.
- Assets can be financed over various lease periods related to the equipment’s economical life.
- Assets can be funded from either the revenue budget (operating lease) or capital budget (finance lease) dictated by the healthcare trust’s requirements.
- Residual value risk sits with the lessor thereby outsourcing an element of equipment risk under an operating lease.
- Upon lease expiry, the asset can be returned to the lessor or the lessee may choose to extend the lease arrangement if required.
- Equipment upgrades can be facilitated and the lease arrangement amended to give equipment a longer life.