Factors to weigh when deciding whether to buy or rent

Practice Management. By Julie A. Jacob, AMNews staff. April 2, 2001.

Every physician starting out in solo practice, as well as every fledgling medical group, has to choose whether to lease or buy equipment and office space.

Although most financial experts agree that it makes more sense financially to buy a home vs. renting an apartment if you plan on staying in an area for at least a few years, the pros and cons of office and equipment ownership aren't quite so clear-cut.

Take office equipment, for example. It isn't always the best decision to buy every piece of equipment that you need in your office, said Alan S. Whiteman, PhD, president of Healthcare Integration Consultants in Fort Lauderdale, Fla., and co-author of Cutting Costs in the Physician Practice.

A good rule of thumb is to buy basic, durable equipment that will last for years, such as exam tables and blood pressure cuffs, but to lease expensive, high-tech equipment that will soon become obsolete, Dr. Whiteman said. That way, you can upgrade to the newest version of the equipment when your lease expires, he added.

The decision about whether to lease or to buy office space is more complicated, however. Physicians need to weigh a variety of factors when making that important decision, including:

• The availability of rental office space in the area and the current rental rates.
• Whether you plan to practice in that area for the long term.
• Whether the capital earmarked for a building down payment will be needed for other business expenses.

For example, if office rent is reasonable in the area in which you practice, and you aren't sure if you want to settle in that area, then it's probably best to rent, Dr. Whiteman said. [...]