Leasing market growing for health care equipment

Obsolescence and capital wherewithal are some reasons that physicians might consider leasing their machines instead of buying.

By Mike Norbut, AMNews staff. Dec. 19, 2005.

The leasing market for health care equipment is growing by about 7% annually and should exceed $8 billion in volume by 2007, and physicians are playing a significant role in the industry's growth, according to a recent report.

The appeal of new technology and revenue-enhancing equipment is driving the increase of capital acquisitions, states "Healthcare Equipment Leasing: U.S. Market Dynamics and Outlook, 2005-2007," a report released by the Arlington, Va.-based Equipment Leasing Assn.

Most investments fall in a range between $250,000 and $5 million, and diagnostic equipment is the leading category in terms of money invested, the report says.

That dollar range is low enough for a hospital or large multispecialty group to consider simply purchasing the equipment with cash or through a loan, but smaller physician groups often turn to leasing as a way to finance their capital expenditures, said Rick Carmichael, managing director of R.S. Carmichael & Co. a market research firm that conducted the study.

"The concept of leasing is fairly widely accepted by physicians," Carmichael said. "The degree of leasing a lot of times is a function of where they are in terms of practice life."

As physicians watch their reimbursements decline and overhead costs increase, they are looking for other possibilities to boost revenue. Many are turning to ancillary services they can offer in their offices, such as ultrasound imaging or small MRI machines. They also are considering technology investments to enhance their practice's productivity and collection capability. But these projects come with substantial costs, and not every group has the assets to afford even a down payment to get a bank loan.