Leasing Medical Equipment to Reduce Practice Costs

Leasing Medical Equipment to Reduce Practice Costs

Running a healthcare business is one of the highest cost specialized industries to become an entrepreneur in. This is not just because of the educational expense involved in moving into this sector of business, but also because of the waiting periods for insurance reimbursement and the cost of payroll and equipment. Finding ways to free up cash flow while making your expense sheet more efficient is the key to making your practice as profitable as it can be while providing excellent care to patients. By leasing medical equipment, you have the ability to ensure that your practice has everything it needs while still taking care of the bottom-line expenses that affect your continued growth and development.

The first thing to remember about leasing, and the thing that leads to many of the benefits down the road, is that the IRS does not consider leases to be purchases. That means you have no new asset on your balance sheet, no depreciation to manage, and your monthly payments are not payments on a loan, they are payments for a service—making them part of the tax deductible business overhead that you are able to write off 100 percent against your business income. This reduces your tax burden without actually affecting the money going out or coming in, freeing up cash flow and increasing your efficiency.

The next thing to keep in mind is obsolescence. When you lease equipment, your commitment is usually for a shorter term than an outright loan would be, and at the end of the term you are free to trade up to newer models or explore leasing through other providers. This means that even if you do not wish to upgrade, it is possible to get more out of your renewed lease by using market forces to help you negotiate rates. It also means that when you do need to upgrade, you can do so cleanly, without worrying about paying off or making a down payment on the new equipment. That also reduces the amount of cash that has to be tied up in it, leaving you with more money to use freely when you need to meet other expenses.

Lastly, leasing medical equipment means having the ability to add or subtract units as you need them without worrying about tying up all of your practice’s finances to make the trade. If there are pieces of equipment that are needed seasonally or that you evolve away from needing completely, the ability to swiftly change things by taking out short-term leases or declining to renew leases on unused equipment means you have better control over your asset management and an easier time balancing it against other expenses, leaving you in a position to make business decisions more freely by keeping your practice costs in check.