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Should Your Practice Buy or Lease Medical Equipment?




When it comes to acquiring the medical equipment and supplies you need to run your practice, is it best to buy or lease?

It’s an important decision for physicians and managers that can have a significant financial impact on a medical practice. Depending on the equipment you need and the financial health of your practice, there are benefits to both options.

Benefits of Leasing Medical Equipment

Protection against obsolescence — Even practices that tend to buy their equipment will often lease larger, more expensive machines if the technology is constantly changing to avoid owning obsolete equipment.

Fewer maintenance responsibilities — The company that owns the equipment will handle maintenance and repairs, as well as the proper disposal of the equipment.

Less capital needed initially — Leasing is an attractive option to smaller practices or newer practices that may not have as much capital to spare. With leasing, the initial investment is less because there are no down payments, and the practice is not financially responsible for the equipment after the lease expires.

Flexibility — Not only is there more flexibility in terms of payments, but this option allows physicians the freedom to make changes, such as upgrading their equipment or changing vendors without the commitment of owning the machine.

Benefits of Purchasing 
Medical Equipment

Lower long-term cost — Whether it’s a car, a house or equipment for your office, purchasing will almost always yield lower costs in the long run.

Ownership — This sounds obvious, but owning the property is definitely beneficial if the equipment can be used for several years. It can increase the value of your business, and as an owner, you have the option to sell the equipment if it is in good condition.

Simpler process — Once you own the equipment, it is yours. You don’t have to re-negotiate a contract to use it.

There is no one-size-fits-all answer and there are advantages and disadvantages to both options. There are a few questions you should ask yourself that will help steer you in the right direction.

  • How often does the equipment need to be replaced?
  • How often does the technology change?
  • What costs are associated with the equipment? Does it need regular maintenance?
  • Will your staff need training? Are additional parts or software required?
  • What is the financial state of your practice? Do you have additional capital?  Are you able to apply for credit?

Physicians and managers may think that purchasing medical equipment is the best choice in the long run for their practice, but are unable to make the large financial commitment at once. Many banks offer loans tailored to medical practices, as well as other SBA and business loan options. If ownership fits into your practice’s structure and you think a loan will help you accomplish that, work with your banker to determine a solution that will best meet your needs.

Ultimately, the best solution will vary from practice to practice. Your banker or your contact at the medical supply company can help you with a thorough analysis and weigh the pros and cons to determine the right answer for 
your practice.  

Howard H. Lutz is Senior Vice President, Private Banking Manager, for Amegy Bank San Antonio. He leads a team of professionals that work extensively with physicians, and hand in hand with bankers from all lines of business enabling clients to receive one-on-one, personalized solutions and comprehensive service at any time.

The Private Banking team specializes in meeting and anticipating the needs of doctors, corporate executives, professionals, entrepreneurs, business owners, wealthy individuals and families who expect and deserve excellence and seek personalized relationship banking.

For more information, Lutz can be reached at (210) 343-4555 or howard.lutz@amegybank.com.

MD News September 2011, San Antonio


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