• Government
• Profession
• Business
• Opinion
• Health

• Health reform
• H1N1
• P4P
• EMRs
• Medicare
• Liability
• AMA House
• » More

• Book Excerpt
• Business Pitch
• Meetings
• » More

• Contract Language
• Ethics Forum
• In the Courts
• Practice Management
• Technically Speaking
• » More

• Issue dates
• Regions
• Health plans
• Sections
• News briefs
• Columns
• Editorials
• Letters
• Writers
• Other years

• Search tips
• E-mail alert
• Radio
• RSS
• Mobile
• Subscribe
• Institutions
• Staff directory
• Advertising
• Permissions
• Reprints
• News media
• Site guide
• Useful links
• About
• Premium
• Contact

Leasing rather than buying equipment raises own issues

Contract Language. By Steven M. Harris, amednews contributor. Oct. 7, 2002.

• PRINT|
• E-MAIL|
• RESPOND|
• REPRINTS|
• SHARE

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

SEE ARCHIVES

Because of the availability of new technology and the increased capital expenditures in relation to your patients' needs, you may decide that it is better to lease rather than buy equipment for your practice.

There are several considerations that may drive your decision and that you should consider during a review of a proposed lease agreement, including: term and rent payments, maintenance, risk of loss, insurance, option to purchase and taxes.

The term of the lease agreement should be specifically defined and include a date when the lease begins and a date when it ends. Often lease agreements include an automatic renewal provision. In such a case, be sure to mark your calendar for the future date so you will not automatically agree to a lease extension.

The rent installments should be payable monthly by a set date and may include a penalty provision for late payment. You may request written notice indicating your payment is late before assessment of a penalty.

To assess whether the installments represent the fair market value for leasing the equipment, consider calculating the monthly rental installment based upon a per diem payment, which is computed by dividing the annual rental cost by the average number of business days in a year.

The lessor should maintain the equipment in its operating condition and make any necessary repairs at the lessor's sole cost and expense.

Your equipment lease agreement should contain a provision that specifies that the lessor will keep the equipment in good repair, condition, and working order so that compliance with any applicable standard maintenance schedules and warranties are the sole responsibility of the lessor as the owner of the equipment. [...]