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5 Steps to Acquire Medical Equipment and Prevent Buyer’s Remorse

June 25, 2015

Acquiring new equipment for a medical or dental practice requires thoughtful planning and strategic budgeting. It is important to research all aspects of the purchase including equipment options, manufacturer reputation, service and maintenance costs and financing options. As with any major financial decision, you should always consult a financial services professional to help you navigate through the intricacies of the purchase. These five steps may take more time and effort upfront, but your due diligence will help you prevent any buyer’s remorse in the future.

Step 1: Assess your Situation
Before you decide to acquire new equipment, you should first assess the situation. The basis of your decision should be made on necessity, affordability and profitability. Some questions to ask yourself during this stage of the process are:
  • What is my budget?
  • What am I trying to accomplish with this purchase?
  • What about maintenance and repairs?
  • What features and functions are important?
  • What features would be “nice to have” and how much value do those features provide?
  • How do the alternative options stack up based upon value?
You may be tempted to stop once you have answered the first question, but the time and effort you put into answering all of these questions will help you avoid significant time and money lost to bad decisions.

Step 2: Research the Investment
Finding the right piece of equipment is important, but it is also important to research other facets of the investment. Factors like the reputation of the equipment manufacturer, the reliability of your financing partner and alternative options to purchasing new equipment altogether are important things to consider before signing on the dotted line. 

Step 3: Consider Service, Maintenance and Installation
The initial cost of the equipment is not the only cost you should consider.  An important element of your decision should be the ease at which the equipment can be installed and serviced. Inoperable equipment affects your ability to care for patients, which results in lost income. Be sure the company that manufactures your equipment has a well-connected network to avoid delays in service or repairs.

Step 4: Consider Acquisition Options and Tax Incentives
Once you have selected a piece of equipment, the next step is deciding how to acquire it. Your two main options are buying the equipment outright or leasing it. When making this decision, you will want to consider two factors: your budget and the nature of the equipment. If you decide to lease, there are two common leasing options:
  • Operating or true lease. This type of lease is short-term compared to the life of the equipment. During the life of the lease, the leasing company is often responsible for maintaining and insuring the equipment. This option is best used for equipment that may become outdated quickly or requires expensive maintenance.
  • Equipment finance lease. This type of lease agreement is usually projected over the life of the equipment with the option for the lessee to acquire ownership of the equipment at the end of the lease. This option is useful for the equipment you plan on using for an extended period of time.  Often the lessee is responsible for maintenance and insurance costs.
You may experience certain tax benefits depending on the option you choose. For example, choosing the finance lease allows you to claim capital allowances to help offset the asset against your tax bill.

Step 5: Consult a Finance Professional
Financing medical equipment can improve cash flow and reduce overhead costs. It also allows you the opportunity to keep your equipment current because you have the option of returning the equipment for a new piece at the end of the lease. Consult with a financial professional prior to making your final decision. Their expertise will help you navigate through the intricacies of all financial choices available to you.

When it is time for your practice to replace or acquire new equipment it is important to thoroughly research all aspects of the purchase and the investment. Consider not only the sticker price, but also the cost of future maintenance and repairs, and choose a company with a solid service reputation. Consider all acquisition options and consult a finance professional, like a commercial lender at Peoples Bank, to help you find the best option for your unique situation.